What grade would you give the property tax system in your state?
In 2019, the Council on State Taxation (COST) and the International Property Tax Institute (IPTI) graded the property tax systems in all 50 U.S. states and select international jurisdictions. This scorecard compares property tax systems based on three broad characteristics - transparency, consistency and procedural fairness in tax appeals. The Scorecard didn’t consider the amount of property taxes (you can breathe a sigh of relief, New Jersey) but rather administrative practice based on the jurisdiction’s laws and regulations.
On the A-B-C-D-F scale, the highest grade given was a B+, which went to only two U.S. states and three non-U.S. jurisdictions. On the low end, the U.S. had two state systems
“Reverse tax appeal” is the term used for when a taxing district appeals a taxpayer’s property tax assessment. This can be a municipality or, in Pennsylvania, a school district. Targets of these reverse appeals are usually commercial properties, but there is no limitation on the kind of property that can be the subject of a reverse tax appeal. Below are some common questions that come up concerning reverse appeals.
1) Can my town appeal my property’s tax assessment?Yes. New Jersey law allows a municipality to challenge the tax assessment of any real estate in the taxing district, just like a property owner challenging their own assessment. In Pennsylvania, school districts also participate in tax appeals and have the right to challenge property tax assessm
Negotiating a lease is like a game of chess. Move, countermove - offer, counteroffer - both chess and negotiation depend on the ability to read and adapt to a changing situation, carefully positioning your assets while thinking several steps ahead. A well-executed gambit can win a game - or result in a great deal. Here are seven “strategies” to help guide your commercial lease negotiations.
1) “Know thyself” – formulate a budget and know what you can afford.
In a chess match, if you’re unfamiliar with how your own forces move and work together, you’re going to have an uphill climb towards victory. You need to know the basics of what you can do and what you want to do before you begin. In leasing negotiations, even before bidding on
To rent or not to rent – that is a good question.
You won the mortgage game. You refinanced your loan when rates were in the 2% range, and your monthly payment is super low. As time passes, you find that your home is getting a little too cramped, or a little too big. You might find out that you need to move for work. You hate the idea of losing that low rate. What do you do?
If you can buy your new home without selling your existing property, one option is to rent your home. More and more single-family homes are being rented out as owners look to hold onto the value in cheap loans.
Still, renting is a scary thought - you’re bringing in a total stranger to live in your home. What if they won’t pay rent? What if they trash the house? These are
I was at a county tax board hearing recently waiting for my case to be called. As I waited, the board heard an appeal by a taxpayer representing himself. There were renovations to the home, and his assessment was increased. The increase was much more than just the cost of the renovations because the town appeared to take into account a recent sale.
The town had made a lowball offer to settle (less than $500 in tax dollars), but the taxpayer didn’t want to take the offer. His property’s assessment went from under $900,000 to over $1.2 million (about a $6,200 increase in taxes).
The taxpayer presented evidence of the value of his property, but there were two big problems. First, his sales were rejected, because they didn’t fit into the board&rsq
It’s time to review your property’s assessment for a 2023 tax appeal. What does that process look like?Because it’s the taxpayer’s job to prove that the tax assessment is too high, we’re looking to see if there is evidence of over-assessment. In other words, could you sell your property for what the tax assessor says it’s worth?Residential property is usually valued by comparing your home with others that have sold recently, so we usually just ask for the property address. However, if you recently purchased your home, or if you know that a home (or homes) similar to yours sold in your area recently, or if you’ve had the property appraised recently, providing that information can help smooth the review process.For a commercial property, we look at the
How often have I seen this: New Jersey commercial and residential real estate sale and lease listings sitting on the market getting lowball offers (or no offers) because of high property taxes? Even once is too often. I’ve seen it more than once.
With the highest property taxes in the country, New Jersey buyers and tenants have to be property tax savvy, so it’s no surprise these listings sit for hundreds of days with no movement. So, what’s a seller or landlord to do?
Normally, if the property’s assessment is too high, the simple answer is to file a tax appeal. However, when you’re selling or leasing real estate, every dollar counts. If you file an appeal, spend money on professionals and then sell or lease, will you see any of the tax benefit? Even if the asse
Perhaps you’re ready to take the leap and purchase your first investment property. Or it could be an expansion of your portfolio. Maybe your business has outgrown your leased space, and the best option for you is to buy a new place. Here are five things to know about commercial property taxes in New Jersey when investing in New Jersey real estate:
OK, so maybe this is an obvious one, but it bears repeating and emphasizing. For many New Jersey commercial property owners, property taxes are the single biggest annual expense item. Particularly for investment properties where your NOI determines how much the property is really worth, failing to consider the impact of property taxes
It is common for a New Jersey tax assessor to increase your assessment after buying a property. If you question the higher assessment, you might be told that there is nothing you can do about it. After all, a tax appeal argues that the property is worth less than its assessment. And you just paid about as much or more to buy it. Many, if not most, tax appeal attorneys focus solely on “regular” appeals challenging the assessment based on the property’s value. These attorneys might say that they can’t help you, or that you don’t have a case. Perhaps they don’t even know that your increase was a result of an illegal spot assessment. Therefore, they’ll say there isn’t anything that can be done. Not so fast.
A New Jersey spot assess
In tax assessment terms, Monmouth County, NJ is a world unto itself. For many property owners, filing deadlines are different. Assessing practices are different. And assessments rarely stay the same from one year to the next. Let’s break down some of the most important ones.
First, assessment notices and filing deadlines. In most New Jersey counties, you can expect to receive your notice of assessment in early February of the tax year, with a filing deadline of April 1. However, in Monmouth County, the same notice would be received in about November of the prior year, and your filing deadline for a county appeal is January 15th. This means that an important notice ab
The assessment of real estate for taxation is the main way NJ allocates the cost of local government among those who share in its benefits.The intent and goal of tax laws is (or at least should be) the equal distribution of that cost. However, no government system is, or can be, perfect. Some level of inequity is virtually inevitable.
If that is the case, which risk is preferable – the risk of compelling one individual to pay more than their fair share of taxes, or the risk that many people are paying a little more because an individual is paying something less than their fair share? Or put differently, do you favor the right of the individual to not pay more than their fair share, or the right of many?For many fundamental freedoms, the right of the
New Jersey law provides exemptions from property taxes for properties used for a wide variety of activities beneficial to society. A non-profit organization whose purpose is categorized as tax-exempt by New Jersey law may be eligible for a property tax exemption, provided the property is actually used for that purpose and the activity on the property is not conducted for profit.For example, exempt activities of a religious organization may include:
There is no minimum level of exempt activity re
Jersey City recently authorized its Tax Collector to mail out estimated property tax bills that include a significant rate increase. How significant? The rate was raised up to $1.889 per $100 of assessed value, from $1.604 per $100 in 2021. According to the Division of Taxation, the average residential assessment in Jersey City in 2021 was $461,925. At last year’s tax rate, that assessment would yield an annual tax bill of about $7,400. With the new tax rate, that same property owner would pay about $8,700 annually, an increase of about $1,300, or almost 18%! This will also hit homeowners hard this year, because the first two quarters are calcula
New Jersey tax assessors often send information requests to real estate owners in their town. These requests could look like anything from a form letter to a complex form. Regardless of the form, it asks for leasing information, expense details, and particularized property descriptions. Commonly called “Chapter 91” requests, responses to these requests are time-sensitive, can affect your right to appeal your property tax assessment, and should not be ignored. I’ve counseled clients on such requests many times during my 15 years of practice in this field. Accordingly, here are a few answers to some common questions about these requests. WHAT IS A CHAPTER 91 REQUEST? A Chapter 91 request is made by your local tax assesso
A classic spot assessment is the reassessment of a single recently-sold property that isn’t part of a larger scale reassessment or municipal-wide revaluation. It is Illegal! Spot assessments are illegal in New Jersey because the state constitution requires uniform treatment in taxation. In general, reassessments must be performed on all properties as part of a larger reassessment cycle, or else because a single property has been significantly improved upon, to comply with this constitutional requirement. However, when the assessor increases the assessments of only a handful of recently sold properties, he or she has violated this constitutional requirement, and you can seek relief from the increase. There are unscrupulous asses
By now, most every New Jersey real estate owner should have received their property tax assessment postcard. For some reason, if you have not received the postcard, or lost it, call your municipality for a replacement. The postcard tells you the assessed value of your property which is used to determine your property tax bill. This assessment can be wrong. And in New Jersey, every property owner (and some tenants) has the right to appeal their tax assessment. If your assessment is $1,000,000 or less in Monmouth County, it’s already too late - the January 15, 2022, filing deadline has already passed. But the deadline to file an appeal in most locations is April 1st
It’s that time of year again. If you haven’t already, you will be receiving your New Jersey Property Tax Assessment postcard from your local tax assessor. Keep an eye open for it – it looks something like this:
If you do not receive a postcard or misplace it, you can contact your municipality for a replacement.
What Does the Postcard Say?The postcard tells you the assessed value of your property. Your municipality calculates how much you owe in property taxes using your assessment and the local property tax rate. The assessment is just the local tax assessor’s opinion of your property’s value. Because many factors affect a property’s value, assessments can often be wrong. When the
As a New Jersey property tax appeal attorney, I spend significant time explaining the tax appeal process to clients. This blog is intended to answer some of the most common questions about appeals to the county Boards of Taxation, a.k.a. county tax boards. Appeals to New Jersey’s state Tax Court are different in some ways. Thus, we will address them in another blog post.
When do I have to file my property tax appeal?
For most of New Jersey, tax appeals must be filed on or before April 1 of the year on appeal, or within 45 days of the bulk mailing of assessment notices. However, the deadline is May 1 when there is municipal-wide revaluation or reassessment.
For counties participating in the “
To function, local governments collect property taxes from commercial property owners and homeowners within their borders. The amount of taxes a property owner pays depends on the assessed value of the property and the local tax rate. A tax assessment is an opinion of value from the local tax assessor. Because there are many factors that affect a property’s value, assessments can often be wrong. Consequently, the resulting assessment can be excessive or discriminatory.
Your assessment may be excessive or discriminatory if it meets one of these two standards:
Four New Jersey municipalities, a deputy tax assessor and a handful of individual taxpayers have filed a lawsuit seeking to overturn a recently-enacted law. The law grants hospitals a tax exemption in exchange for a direct per-bed payment to the municipality. This exemption is in lieu of traditional property taxes.
The case was filed in Mercer County Superior Court. However, Mala Sundar, Presiding Judge of the Tax Court, was temporarily transferred to the Superior Court. Understandably, the court desires expertise in taxation in this case. Thus, it triggered the Tax Court’s limited jurisdiction. The parties have filed cross-motions for summary judgment, with a hearing scheduled for mid-November.
The plaintiffs’ primary argument is that the
Most New Jersey tax appeals boil down to a classic battle of the experts. The taxpayer’s appraiser squares off against the municipal appraiser, and the Tax Court decides who has the better part of the argument. While that’s something of an oversimplification, it catches the essence of the trial. It also tends to some measure of predictability in the process, and facilitates settlement of many appeals. Still, there are cases that can’t be settled for one reason or another. If that’s the case, one of the most important decisions a tax appeal litigant will make is the choice of appraisal expert. If you hire someone unfamiliar with the dynamics of appraising for Tax Court or inexperienced as a testifying witness, you run the risk of putting your claim in serious jeopardy. Even if the assessment is patently wrong, the appraiser has to show it, and then go on to prove the true value of the real estate. What does all this have to do with the case recently decided by New Jersey’s Appellate Division? Plenty. In VNO 1105 State Hwy 36, LLC %Stop & Shop v. Township of Hazlet, a property owner retained an expert who also happened to become the tax assess
What can we learn from yet another New Jersey Tax Court opinion rejecting a taxpayer’s assessment challenge? More than you might think.In Faber v. Toms River, a self-represented taxpayer challenged her assessment by pointing out discrepancies between the property and the property record card, and by testifying about three sales of similar homes in town. The property owner first argued that the property record card was wrong, and that both the size of the home and the lot were overstated. However, she attempted to prove the discrepancies through the testimony of the tax assessor, who had not set the assessment and was not subpoenaed to appear at trial. As a result, the assessor had little knowledge of the subject property, and the court found that the taxpayer failed to offer any evidence to support her claim as to either the square footage or the lot size except her own testimony to that effect. The taxpayer also testified about three properties she identified as similar. However, the Tax Court rejected these sales as valid indicators of the subject’s value for various reasons, including differences in location, style and lack of sup
This is the long-delayed and final entry in this series of posts discussing cases published by the Tax Court of New Jersey during the first week of 2021. Much has happened since that time, but the cases are still relevant. Without any further ado…The third published Tax Court case involved the trial of a nursing home for seven tax years, Eagle Rock Convalescent Center v. Twp. of West Caldwell, Nos. 6780-08, 8154-09, 2089-10, 10834-11, 264-12, 868-13 & 5687-14 (Tax Court January 6, 2021). For those unfamiliar with the practice, each tax year is a separate, appealable event, and in the case of complex commercial properties (such as a nursing home) where large tax dollars may be at stake, it’s not unusual for the case to take many years to resolve. Seven years is definitely on the higher end of the spectrum, but it’s not the limit by any stretch.Nursing homes are something of an enigma for property tax valuation; the Tax Court views them as income producing property, but despite its preference for the income approach to value such property, the court has consistently found the income data to be lacking and turned to the cost approach to value them
Our second installment from the Tax Court’s busy first week of 2021 is a twist on an exemption opinion penned by Presiding Tax Court Judge Mala Sundar, P.J.T.C. The case, Township of Freehold v. Centrastate Healthcare Services, Inc., Nos. 000047-2016 & 000048-2016 (Tax Court January 5, 2021) marks further fallout from the Tax Court’s opinion in AHS Hospital v. Morristown, 28 N.J. Tax 456 (Tax 2015), though this time falling in the favor of the taxpayer. Let’s dig in a little to this one. First, a bit of history. The subject property was transferred to a for-profit entity in 2008, though still used as a clinic for indigent patients. The municipality filed an appeal from the “failure to impose” an omitted assessment for 2014 and 2015. The municipality initially moved for summary judgment on the grounds that a for-profit entity was not eligible for a tax exemption. The Tax Court initially denied that motion, and then later granted it, leaving open the issue of valuation for trial. After a change in counsel, the taxpayer moved for reconsideration of the grant of partial summary judgment rescinding the exemption on the grounds that the Ta
While the rest of us were preoccupied with goings on elsewhere, the New Jersey Tax Court was quietly working away, bringing in 2021 with a trio of published decisions. The first, authored by Tax Court Judge Mary Siobhan Brennan, J.T.C., involved mutual appeals by taxpayer and municipality in 30 Journal Square Partners, LLC v. City of Jersey City, No. 009666-2020 (Tax Court December 30, 2020). In this case, the municipality filed its appeals in early June at the county tax board, and the taxpayer filed directly to Tax Court on the July 1 filing deadline. The taxpayer contacted the county board, requesting that the municipality’s appeals be dismissed for lack of jurisdiction. While the municipality did not object to a dismissal, the City wanted the right to appeal from the county’s judgment to the Tax Court. The taxpayer took the position that the county board was deprived of jurisdiction, and the judgment would be a nullity from which the municipality would not be able to appeal. The taxpayer moved before the Tax Court to have jurisdiction established in the Tax Court, and to required the City to withdraw its county appeals. While the municipality did not co
It’s been an interesting year for New Jersey real estate. Retail and office markets are hard hit by lockdowns and the introduction and ongoing appeal of remote work, and warehouse is the big winner with asking rents at an all time high. What about the residential market for first time homebuyers, or those with newfound freedom to move farther from a workplace? In a word: crazy.In prime areas, homes hitting the market are snapped up in days or even hours. Bidding wars are common if not the rule, and sellers have almost unilateral bargaining power in negotiating key contract provisions, such as home inspection, mortgage and appraisal contingencies. How does this translate into a property tax problem? Under normal circumstances, the sale of real property can’t be the sole basis to trigger an assessment increase in New Jersey. That’s good news when prices are inflated due to bidding wars and high demand, but there’s a catch.Often, if a seller has made significant updates to the home, or if the property in question is a “flip”, or a home purchased and renovated within the last few years, the tax assessor has the freedom to increase the a
In a recent case decided by the New Jersey Tax Court, a municipality asked for reconsideration of a decision reducing a commercial property’s assessment. The property in question was a mixed-use retail and warehouse building, with some mezzanine space in both the retail and warehouse areas. The main issue on reconsideration involved whether the Tax Court should have included the value-in-exchange of the mezzanine space value in the rent for gross leasable area, or given it a separate rent. Since there was no evidence of the value of the mezzanine, argued the municipality, the Tax Court had to affirm the assessment. The Tax Court rejected this argument, finding that the mezzanine space was properly included in the rental value of the main area. However, this is a case where the issue isn’t really the issue. In general, reconsideration motions are a long shot, and not undertaken lightly. In this case, at the time of the trial, the town withdrew its counterclaims and rested on the assessment without presenting any affirmative evidence. This wasn’t necessarily the plan, as they had an appraiser present at trial and ready to testify to an appraisal report. Was it a g
On March 19, in light of the COVID-19 outbreak and the resulting public health emergency, the Chief Justice of the New Jersey Supreme Court entered an order extending the filing deadlines for 2020 property tax appeals with the County Boards of Taxation and the New Jersey Tax Court. Instead of April 1, 2020, the filing deadline has been extended to the *later* of either a) May 1, 2020, or b) 30 days after Governor Murphy declares and end to the state of emergency in effect under Executive Order 103. This order does *NOT* toll or extend the statute of limitations for deadlines that have already passed, e.g. the January 15th deadline for Monmouth County Board of Taxation appeals. The March 19th Order is accessible here:March 19 OrderSubsequently, the Supreme Court entered an Omnibus order confirming this order, accessible here:Omnibus OrderOn April 7, the Court entered a further clarifying order, confirming that the filing deadline ex
It’s been a big week for taxpayers in New Jersey - three significant property tax cases came down from the courts in the last week. First, the Appellate Division granted a property tax exemption to the operators of an upscale restaurant on a university campus, reversing the Tax Court’s decision below granting summary judgment to the municipality. A published opinion involving a tax case is rare; one reversing the Tax Court even more so, so it’s worth taking notice. It’s interesting to see the Appellate Division balancing the interests between state higher education and the needs of local government. Next, the Tax Court re-affirmed the protections afforded by the Freeze Act, ruling that a sale of the property was not grounds for finding a change in value that would void the Act’s protection per se. As in many cases, some of the most interesting comments are reserved for footnotes. It’s good that taxpayers can rely on the Freeze Act with confidence, particularly given the rise in rolling reassessments and more frequent revaluations. If the Act applies, the town really has a hurdle to get over to prevent its application. Finally, the Tax Court gav
Both in the trial courts and in the appellate division, oral argument is an opportunity to marshal your best arguments, look the court in the eye and make the case why your client should prevail. However, in a time when it seems that every cost is closely scrutinized, is there still a place for a trip to court to say something already captured in writing? In short, yes. A recent published appellate decision affirmed both the explicit and implicit importance of oral argument. In this tax foreclosure action, the trial court denied a prior lienholder’s request for oral argument in opposition to a dispositive motion to enter final judgment. The trial judge denied the request with a one-sentence explanation, relying on an opinion involving a rule governing family matters. The appellate court found that such a request should have been granted as of right for the dispositive motion at issue, and reversed the trial court’s decision.In an interesting twist, the defending lienholder raised a second basis for reversal for the first time at oral argument. While the court declined to reverse on that issue, the fact that it was mentioned in the court’s opinion at