For many, the beginning of a new year signals the time to make some kind of change in their lives and become more like their ideal self. For others, January signals the time to make a different kind of change, one that is much easier to do: slash your property tax bill. The New Jersey tax appeal process involves a number of steps and using an experienced property tax attorney to guide you through the process will make your New Years resolution much easier to comply with.
Since New Jersey’s tax appeal season is toward the beginning of the year, reducing property taxes is a perfect New Year’s resolution. By the end of January of each year, all New Jersey homeowners are supposed to receive their annual appraisal. That’s the little green card that comes from the tax assessor’s office. Since all properties within a particular municipality in New Jersey are taxed at the same rate, it is the appraisal that differentiates one owner’s tax bill from another and is the actual measure of whether a property is being taxed appropriately. fair or not. The period in which an evaluation can generally be appealed in New Jersey is from the time the evaluation is received until April 1 (May 1 if there was a reevaluation or reevaluation).
The first step in understanding whether you are taxed too heavily is understanding how your property is valued.
In New Jersey, your appraisal is the value at which your property was appraised at the time of the last appreciation. Although the amount at which the municipality values your property changes from year to year, your appraisal generally remains the same. Each year, each municipality in New Jersey is assigned a “compensation index,” which is intended to reflect the current value of properties in a particular municipality relative to its value in the year of appraisal.
You can find your municipality’s compensation ration by calling your city tax advisor or county tax council. It can also be found on the New Jersey Division of Taxation website. The “average ratio” is the percentage of “true value” that is considered to be your assessment. In other words, divide your appraisal by the compensation ratio to get the true valuation of your property. This is the number your appraiser is actually using to figure your property tax, not your appraisal.
For many people, deciding whether to appeal their appraisal is easy once they realize the actual appraisal of their property. For others, especially people who have owned a property for a long time and have not been thinking about buying or selling, the question of whether to appeal an appraisal is less clear.
Here are several rules of thumb to consider when deciding whether to appeal your evaluation:
- As your appraisal ages and your compensation rate declines, there is a greater chance that your appraisal will not be in line with the actual value of your property.
- Conversely, when a leveling ration exceeds 100% because property values have fallen (as it has in recent years), that means that, on average, properties are overvalued in those municipalities. The property owner still has the burden of proving that his or her private property is overvalued, but an average ratio of more than 100% is a good indicator of overvaluation.
- When you live in a development or neighborhood where the properties are very similar and prices have dropped significantly, the value of your individual property has probably decreased and your appraisal and compensation rate has not kept pace.
- Whenever a property has unique characteristics that make it very different from those nearby, there are often reasons to lower the appraisal. For example, a very large old house in a neighborhood of smaller and newer houses will often be evaluated as a larger house with the characteristics of the surrounding areas. In fact, these homes tend to be harder to sell and often warrant lower appraisals.
The next step in the process for individuals is deciding if they want to work with an attorney in this process. While corporations and other legal entities must be represented by an attorney under New Jersey law, an individual owner can represent himself. However, there are very good reasons to consider keeping one:
- Many attorneys work on a contingency basis so that there are no legal fees unless your taxes are reduced. There are certain fixed out-of-pocket expenses paid by the property owner, but the attorney receives a percentage of the tax savings if, and only if, the appeal is successful.
- An attorney working on a contingent basis should provide a free consultation and conduct their own independent investigation to determine whether an appeal is likely to be successful. If an attorney does not return your calls and takes the time to tell you why you think your evaluation should be lowered, it is a sign that you should look elsewhere.
- Above all, there is the convenience of having an experienced professional handle your case. You don’t have to worry about any of the rules that can be burdensome and, frankly, arbitrary. (For example, property tax appeals can be dismissed if the petition is not printed on legal paper.) You do not need to testify at a hearing, which is generally unfamiliar and uncomfortable for the landlord.
- Many people believe that you will get better results if you are represented by an attorney. This additional year-over-year savings more than offset your attorney’s fees.
Take, for example, the case of Stephen and Rachel Pineles, who decided to appeal the appraisal of their home in Essex County, New Jersey in 2010. “My town hadn’t had an appraisal in over twenty years and my appraisal was outrageous. high compared to the current value of my house, “said Stephen Pineles. “Hiring an attorney to handle the property tax appeal was definitely the right decision for me. I didn’t have to worry about anything. Initially, the tax assessor offered a reduction that was low. In the end, my attorney negotiated a lot. best deal and my property taxes were reduced by over $ 3700 or almost 30% of my tax bill. “
As with anything else, there is some risk in appealing your evaluation. In New Jersey, if your case is unsuccessful, you will not recoup your out-of-pocket expenses. Also, under New Jersey law, your counselor has the right to argue that your assessment is too low. However, this right is limited to cases where your property is undervalued by 15%. If your property’s appraisal divided by the compensation index is $ 100,000, the appraiser can only argue that the appraisal should be increased if he can show that your property is actually worth at least $ 115,000. If your attorney has done good research and determined that there is a good case to reduce your evaluation, it is unlikely to happen.
As the new year begins, in addition to some of the more difficult goals and changes that people envision, it may be worth considering trying to lower your tax bill. It could be one of the easiest and most profitable resolutions you make.