New Jersey homeowners and businesses appealed their property tax assessments in record numbers for the 2009 tax year, a trend that will likely continue in 2010. The recent real estate market downturn has had many property owners questioning the accuracy of the assessed value of their properties. Municipalities that undertook a revaluation of property at the height of the real estate boom are facing an increasing amount of appeals by owners who claim that their assessments are too high.
The assessed value listed on your tax bill is based on the value of your property on October 1 of the preceding year. For tax year 2010, your property is assessed on its value as of October 1, 2009. Although the opportunity to file a tax appeal for tax year 2009 has passed, the deadline for 2010 is fast approaching. A tax appeal in New Jersey for the 2010 tax year must be filed by April 1, 2010.
Property tax appeals can be a wise decision for businesses suffering from the downturn that are looking for savings/reductions in their budget, as well as for individuals who believe their property is over-assessed and for whom taxes are unmanageable. A property tax appeal is not without costs, however, and you should consider these costs when deciding whether to file a tax appeal. First, filing fees vary depending on the assessed value of the property involved. For properties assessed at less than $750,000, the owner must file its appeal with the local County Board of Taxation, which charges a filing fee of up to $150 per lot depending on the assessed value. Owners of property assessed at more than $750,000 are entitled, although not required, to appeal directly to the New Jersey Tax Court, which charges $35 for the first parcel and $10 for each additional parcel of residential property, $200 for the first lot and $50 for each additional lot of commercial property. Second, there is a misconception that if you file an appeal you can delay payment of your taxes until the case is resolved. You must keep your taxes current, even if you file a tax appeal. Failure to pay taxes will result in the dismissal of an appeal. Third, consider and budget for attorney and expert fees. Businesses must be represented by an attorney in a tax appeal and although it is not required, an individual taxpayer may choose to hire an attorney to handle their appeal. Depending on strategy and budget for the tax appeal, an expert appraiser likely will be needed to provide expert opinion on the actual value of the property. Fourth, if a taxpayer is successful in its appeal, the assessed value of its property will be reduced. The resulting refund in tax can be sent directly to the taxpayer by check but is often credited to the taxpayer’s future bills. Finally, in addition to relief in the year under appeal, the taxpayer is entitled to invoke the “Freeze Act,” which allows a taxpayer to keep the assessed value of their property the same for the two years following the appeal. If a taxpayer is successful in having its property tax assessment lowered for tax year 2010, the same assessment will remain for tax years 2011 and 2012. Taxpayers will get some comfort that the municipality will not simply raise the assessment the next tax year, resulting in additional cost to the taxpayer to file another appeal.
The above are only a few general cost considerations for landowners contemplating filing an appeal. With the upcoming April 1, 2010, appeal deadline approaching, it is never too early to start considering the possibility of filing a tax appeal.