Several weeks ago, homeowners across the state were sent official notices detailing their property’s assessed value, a figure that plays a key role in determining just how expensive local property taxes will be each year.
But many homeowners in New Jersey don’t know they have a right to challenge their assessment if they think it’s too high, and that there’s a deadline for filing an appeal, which is generally April 1.
To help clear up any confusion, a bipartisan group of lawmakers introduced legislation last year seeking to require the official property assessment notice — that by law must be mailed to homeowners every January — to include in bolded letters a reminder about the April 1 deadline for filing an appeal. The measure won approval from both houses of the Legislature in late 2016, and Gov. Chris Christie just signed it into law earlier this month.
While the effects of the policy change won’t be seen until next year, when the assessment notices are once again sent out to homeowners, sponsors of the bill praised Christie’s recent decision to endorse it, saying it will help to prevent homeowners from realizing only after the deadline has passed that they can challenge a tax assessment that they believe may be too high.
“Missing the deadline can have real repercussions for homeowners,” said Assemblyman Vince Mazzeo (D-Atlantic). “This simple tweak can help prevent residents from missing out on potential savings.”
Property taxes keep on rising
Christie’s bill signing also comes as property taxes continue to rise across the state, and as hundreds of thousands of New Jersey homeowners have been facing pressure in recent years from two ends of the property tax equation.
The average New Jersey property tax bill went up by nearly $200 to $8,549 last year, according to figures released last month by the state Department of Community Affairs. But state funding for direct property tax-relief programs has remained flat for the last several years, meaning the tax-relief programs haven’t kept pace with inflation or the rising bills.
The bill signing also comes as the total number of property tax appeals remains on the decline in New Jersey and the state economy has continued to improve in the wake of the Great Recession. But appeals are still running higher than they did before real-estate market conditions started to plummet a decade ago, suggesting there still could be opportunities for savings.
In New Jersey, homeowners can’t contest their actual property tax bill, but they can appeal their property’s assessed value. Generally, the main issue to consider for an appeal is how well a property’s assessed value matches up against market values in a community.
On the assessment side of the equation, tax assessors are required to notify homeowners of the latest assessed value of their properties each year by February 1. The state, meanwhile, is responsible for setting a ratio each year that takes into account assessed values and true-market values in every community. To get a sense of whether a tax assessment is solid, homeowners can use the assessed value for their property and the state’s ratio for their town to compare the valuation against recent home sales in their neighborhood. For commercial property owners, the analysis involves a comparison of lease rates.
Burden is on homeowner to prove assessment is too high
During tax appeals, which are generally filed with the Board of Taxation in each county, the burden is on the person lodging the appeal to demonstrate that the assessment is too high. A successful appeal typically means a homeowner will pay less in property taxes, but tax experts say it can also have a downside, especially when there are multiple successful appeals in the same community, reducing a municipality’s overall tax base.
Property owners also need to make sure they do their homework or have legal representation because once the appeals process begins it can result in a tax board determining that an assessment is actually too low — likely resulting in the homeowner facing a higher property tax bill.
When the Great Recession took hold a decade, ago, tax appeals became a popular way for New Jersey homeowners to seek relief from property tax bills that were rising on average by as much as 7 percent annually. More than 116,000 appeals were filed in 2012, setting a state record, and nearly 106,000 were filed in 2013, according to figures tracked by the state Department of Treasury.
But last year, the volume of tax appeals dropped to 49,286. That’s down from 60,334 appeals in 2015, and 69,034 in 2014. The volume of appeals, however, is still much higher than before the recession took hold, when appeals totaled just under 33,000 in 2008.
Whether homeowners end up having a good case for an appeal or not as the economy continues to recover, sponsors of the bill requiring the April 1 deadline to be printed in bold lettering on the annual assessment notice said it’s important that homeowners are made aware that they can appeal, and that there is a set filing deadline.
“Property tax appeals can often be crucial in ensuring tax fairness, especially with fluctuating home values,” said Assemblyman Eric Houghtaling (D-Monmouth). “This will help more homeowners ensure they’re being assessed fairly.”