Property taxes across the U.S. have increased by nearly 20% from 2009 to 2013 according to the National Association of Home Builders. The median annual real-estate-tax payment was $1,917 in 2013, up from $1,614 in 2009. Over the same period, home prices in major urban centers fared badly, decreasing 31%, according to the Standard & Poor’s/Case-Shiller 20-City Composite Index. New Jersey is no exception to the increase in property taxes. For example, I recently heard about a New Jersey home buyer whose property taxes have gone up by 47 percent over the past seven years, while their home’s value plummeted by 22 percent. The following five handy tips can help residents of The Garden State lower their property taxes:
#1: Decode Your Assessment
The first step in launching a challenge is understanding the way your assessment is calculated. While most counties and cities mandate that assessments represent 100 percent of market value, what the house would go for with a willing seller and a buyer, fractional assessments are common. You could very well get a notice in the mail assessing your property at $100,000 when you know you could sell it for more than $200,000. You think you’re getting away with something, but if the fraction your taxing authority uses is 40 percent, you’re actually paying more than you should in property taxes. You can find out what fraction your taxing authority uses by calling the assessor’s office.
Once you’ve calculated the assessed value for your home, if you think the figure is high (and, thus, your taxes), you’ll need to file your appeal immediately.
#2: Get Your Property Record and Check it Thoroughly
Most local governments allow residents roughly 10 days to 30 days to appeal their assessment after notification. To figure out the timeframe in your county or city, check your reassessment noticeor call your local assessor’s office.
It is incredibly important to ensure that your assessor has accurately described your property. To do this, you will need to review what is called the “property record card,” a summary of the characteristics of your home. Make sure there isn’t an extra bedroom, say, or three bathrooms instead of two. Extra features can drive up the value of your home. You can usually find a description of your home on your assessor’s website. If not, you might have to visit the assessor’s office.
If you have made substantial changes to your home, a refurbished basement or new marble counter tops, you might want to be a bit wary of an appeal, since it could have the unintended effect of driving your assessment even higher. But property-assessment advisers say you shouldn’t be too careful. If you feel your property is being overvalued by more than a few thousand dollars, it usually is worth the effort to appeal.
Similarly, look closely at the assessor’s description of your home to ensure that any characteristics that would drive down the value of your property, repeated flooding in your backyard, for instance, or a leaky roof that would be expensive to replace, are duly noted.
#3: Grab Those Tax Exemptions
New Jersey offers senior citizen, veteran, disability, and homestead exemptions that lower the assessed value of a residence. These deductions can add up to hundreds of dollars a year, but they’re not automatic. Qualified homeowners must apply. Applications are available at the tax assessor’s office and, in many communities, a town or county’s Web site. The deadline for filing is usually the day the assessor sets your property tax status.
#4: Launch a Genuine Challenge
If the property tax record data is correct and you’ve claimed any exemptions, but you believe your home isn’t worth nearly as much as the town says, it’s time for an official challenge. Prepare to put in some hours and effort to prove your case. You’ll be in an adversarial position and winning will require a solid, fact-based argument.
Your aim is to establish the actual market value of your house, how much you’d get if you sold it. The assessor will evaluate the market value you’ve put on your house against the valuation of similar houses in the same taxing district.
Unfortunately, the real estate crash has complicated this type of challenge, since the assessments on many of your neighbors’ homes don’t reflect their plummeting market prices. So, a more fruitful avenue might be establishing your home’s actual market value. To do this, you could hire an independent appraiser (typical cost: about $350 to $500). Check with your assessor’s office first, though. Some jurisdictions will not accept an outside appraisal; others require the appraiser to report his findings in person, which adds to your expense.
Alternatively, you could collect sales price data on five to 10 houses that went for at least 10 percent less than your assessed value during the quarter before the last assessment. A real estate agent or professional appraiser might do this or you could use online real estate listings. Remember, the definition of market price is what you’d get if you had a willing buyer and a willing seller, so don’t include foreclosures or short sales in your sample.
Once you have the information, arrange an informal visit with the assessor. If you can come to an agreement, it could save you from making a formal presentation. If you can’t, find out when the assessment review board meets and get on its calendar for an appeal.
#5: Win Your Appeal
Three things will help you build a strong case that your assessment is excessive: facts, figures, and pictures. But review board members will be swayed not only by the substance of your argument, but by your style. A few tips on presentation:
- Watch someone else do it. If you can, attend an appeal board meeting a few days or weeks before yours to see how the members respond to a presentation. Tailor your approach accordingly.
- Keep it short and sweet. Be friendly and stick to the specifics of your appeal. Don’t make arguments about the national real estate market or the evils of taxes. You’ll be allotted around 10 to 15 minutes to speak. Don’t use it all.
- Hold your ground. Some board members may ask provocative questions such as “Would you sell your house for the assessment you’re suggesting?” Don’t bite. Instead, respond by getting back to the case, saying something like: “I’m here to discuss my assessment and believe I’ve demonstrated that it’s out of proportion with 10 comparable properties in my neighborhood.”
- Show and sell. Give the board pictures of homes similar to yours but with significantly lower assessed values. And show photos of your house’s features that should be subtracted from its value, if it’s on a busy street, for example, or the view is terrible. Distribute handouts so every board member can follow your argument. These documents will also be a useful reminder when the board reviews your claim, which might not happen for some time.
If the board decides against you the next stop is court. The conventional wisdom has been that only the most egregious over assessments were worth the expense of hiring a lawyer to go to court. But the calculations have changed. After all, your assessment review board may be turning down appeals simply because it needs to balance the town’s budget. The court will have no such conflict of interest.
