Additional Property Tax Appeal Informaton.
How do I know if my assessment is fair?
In 1973, the New Jersey Legislature adopted a formula known as Chapter 123 to test the fairness of an assessment. Once the Tax Board has determined the true market value of a property during an appeal, they are required to use this formula and automatically compare the true market value to the assessment.
If the ratio of the assessment to true value exceeds the average ratio by 15%, then the assessment is automatically reduced to the common level. This is commonly achieved by the homeowner PROVING to the Assessment Board the true Market Value of your property.
However, if the assessment falls within a common level range, + or - 15%, of the average ratio, no adjustment will be made.
Market Value = Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition si the consumption of a sale as of a specific date and passing the title from seller to buyer under condition whereby :
Buyer and seller are typically motivated; both parties are well informed or well advised and acting in what they consider their own best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of U.S. dollars or in terms of financing arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone with the sale.
Many cases, a homeowner was unable to sell their property in a normal Arm's Length Transaction with typical marketing time at the amount of their Tax Assessment. Another example is a purchase of a home recently which was not a foreclosure or short sale is assessed signifficantly more than the current Tax Assessment on the property. Here is an example of a home being over values for taxation purposes.
If the assessment to true value ratio falls below the common level range, the Tax Board may increase the assessment to the common level.
This test can only be conducted when the taxpayer supplies sufficient evidence to enable the County Board of Taxation to determine the true market value of the property subject to the appeal.
You should inquire into your district's average ratio before filing a tax appeal. This ratio changes annually on October 1, for use in the subsequent tax year.
Director's Ratio= 85%
In simple terms the above example means that if your assessed value is $90,000 and the market value of your property is $95,000. The ratio of your assessed value to the market value would be 94.74% (derived by dividing the assessed value of $90,000 by the market value of $95,000). This ratio is within the common level range (72.25% to 97.75%) and thus the ultimate judgement would be for no change to the assessed value of your property and thus no change to your real estate taxes.
To obtain a copy of the published ratios... called "Common Level Ranges (Chapter 123)", please call the state of New Jersey Local Property Branch at (609)292-7929 or click on the link below. Alternatively, simply call us and we would be happy to assist you with the calculation. There is no charge for this service.
The following questions and answers were developed by the state of New Jersey to assist homeowners in properly preparing for a tax appeal hearing. The appeal process is complex. This information was derived from the New Jersey laws which govern tax appeals: Administrative Code Title 18:12 and New Jersey Statutes Title 54:3 et seq and 54:3 et seq. as an aid to the property owner, but it should not be considered as an all-inclusive guide. Most importantly, it is essential that taxpayers understand and must prove an assessment is unreasonable, compared to a market standard. Also, note that any information herein should not be considered legal advice. Please consider consulting an attorney.
In New Jersey, current assessments are by law assumed to be correct. The homeowner must overcome this presumption of correctness to gain an assessment reduction.
To understand the common level range you must consider what happens following a revaluation. Once a revaluation is completed, factors such as inflation, appreciation, and depreciation cause property values to increase or decrease at varying rates. Other factors may also contribute to changes in property values. Obviously, if assessments are not adjusted annually, a deviation from 100% of true market value may occur.
The New Jersey State Division of Taxation, with the assistance of local assessors, annually conducts a fiscal year sales survey, investigating property transfers that occurred in your community.
This sales data is compared individually to corresponding assessments to determine an average level of assessment in a municipality. An average ratio, sometimes referred to as the Director's ratio, is developed to represent the assessment level in every community.
In any year, except the year in which a revaluation or reassessment is implemented, the common level of assessment is the average ratio of the district in which your property is situated, and is used by the Tax Board to determine the fairness of your assessment.