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Every year, New Jersey taxpayers waste precious income via taxes paid on over-assessed properties. In fact, a recent study conducted by the National Taxpayers Union indicates that at least 60% of taxpayers pay over-assessed property tax. This article will provide the why, what and how of property taxes. In addition, this article will also provide additional resources for further reading.
Why Appeal Your Taxes?
The simple answer is because doing so will save you hundreds if not thousands of dollars. Take into consideration the fact that more and more New Jersey residents have successfully filed tax assessment appeals, and the fact that filing for one need not actually involve an attorney. However, if your appeal is substantial in scope and amount, you may want to consult with an attorney first.
What is the Basis?
The basis for the assessment determines how much taxes can be collected on the property. In order for a taxpayer to contest an assessment, the same must show that the basis was neither of the two:
1. True Market Value (Fair Market Value): Means an accurate assessment of the property’s worth, as compared to other properties similarly situated. In lay man’s terms, this means the value of the property from the point of view of a person who is willing to sell but not required to do so and/or a person who is considering buying but is also not required to do so. This value can be determined by going to the local registrar of deeds, tax assessor, and/or making an online search with Realtytrac, Zillow, PropertyShark, etc.
2. Common Level Range: This is a bit trickier to explain. Simply put, it is the meeting of several factors such as re-evaluation of property prices within the locality, inflation, etc. To make things easier for you, ask your local tax assessor about the common level range of your property. Cross reference this online with realtors and with your neighbors.
How Do I Know If I Can challenge An Assessment?
Challenging an assessment means determining that the assessed value deviates unreasonably from the common range and the fair market value of the property. The operative word here is “unreasonably”. This means a certain degree of deviation is allowed but it should not exceed 15%. This can be done by applying the Chapter 123 test. A caveat though, before challenging an assessment: be very sure that there was no under assessment, otherwise you may end up paying more than the current assessed value.
How Do I Challenge an Assessment?
Tax appeals are filed annually. You start by filing your appeal with the local tax board (usually the County Tax Board) and presenting adequate evidence on the true value of the property. This is usually done on or before April 1 of every year. However, there are instances when this is not the case. For example:
- If a bulk mailing of assessment notices went out in your area, you need to file your challenge within 45 days of receiving the same.
- May 1 after a municipal wide revaluation and/or assessment was implemented.
If you lose the appeal to the local tax board, you can file another appeal with the State Tax board within the prescribed period, as provided for in the ruling/resolution/decision of the local tax board. For more information on how to appeal New Jersey property taxes and the Chapter 123 test, go to the website of the state of New Jersey, more particularly to the taxation division. You can also consult a tax professional and/or an attorney but make sure the consultation is for free.