Since the annual real estate taxes billed by the municipal tax collector in connection with a parcel of property are the direct product of the assessed valuation of the property, it is important to have the assessment properly reviewed each year to determine whether or not the assessment is accurate and fair based upon applicable law and relevant standards and criteria.

The review of the annual real estate tax assessment is particularly necessary when, like now, the economy is in a state of deep decline and property values are eroding and/or plummeting in many areas of the State. Such review will disclose, for example, whether or not the annual tax assessment is too high and should be appealed by the applicable deadline – which deadline is generally April 1st.

A successful real estate tax appeal will cause a reduction of the annual assessment upon the property for the year under appeal – and also potentially for up to two (2) years following that year under New Jersey’s so-called Freeze Act. This, in turn, will result in reduced annual taxes on the property for such year(s); or, in other words, real tax savings to and for the party having the tax payment obligation.

Therefore, if you believe your property may be over-assessed, you should act immediately upon receiving notification of your assessment, if not sooner, to determine whether or not you have a valid tax appeal that is worth pursing.

In order for you to give proper consideration to that issue, it is important to understand a few basic concepts regarding your real estate assessment. First of all, under New Jersey law, the tax assessor in every municipality is generally required, each year, to determine, in his or her own judgment, the full and fair value of each parcel of real estate in the municipality as of October 1st of the pre-tax year. This amount is then used by the assessor to determine and establish the municipality’s assessed valuation of the property for the tax year in question. The tax assessor is required, by law, to notify every taxpayer in the municipality, by mail, prior to February 1st, of the current year’s assessment against the taxpayer’s property (among other information). However, the property assessment amount set forth in such “Notice of Assessment” can be somewhat misleading since it typically represents just a certain portion of the actual value determined by the assessor (except during a revaluation or reassessment year). This is due to an “average tax ratio” for your municipality that will usually be applied to the actual value claimed by the assessor in all tax years that do not involve a revaluation or reassessment.  The “average tax ratio” is also sometimes referred to simply as the “common level”.  The “common level range” for the municipality (which is plus or minus 15% of the average ratio) must also be taken into consideration when attempting to determine whether your property is assessed accurately and fairly.

Thus, you should not incorrectly assume that the assessment amount set forth in your Notice of Assessment is the actual value determined by the assessor in any tax year that does not involve a revaluation or reassessment. Rather, in applying the average tax ratio as well as the “common level range” to the assessed value you may discover that actual value determined by the assessor is excessive and unfair; and, therefore warrants the filing of a real estate tax appeal to challenge the assessment and assessor’s claimed value of your property.

Furthermore, even when the assessment set forth in the Notice of Assessment is based upon a just completed revaluation of all parcels in the municipality or upon a reassessment of your property pursuant to applicable law, you should not assume that assessment amount set forth in the Notice accurately reflects true value of your property.  While in such years New Jersey law requires your property to be both valued and assessed at one hundred percent (100%) of its full and fair value as of October 1st of the pre-tax year (without any application of the average tax ratio or the common level range), the assessment amount set forth in the Notice of Assessment could still potentially be inaccurate or unfair for a number of reasons.  For example, since the revaluation process conducted by the typically takes many months to complete, the data or other information which the revaluation firm relies upon in rendering its opinion and determination as to the (claimed) true value of your property for may, in fact, be outdated as of the statutorily mandated valuation date of October 1st of the pre-tax year.  Thus, even in the case of a revaluation year you are advised to have the assessment properly reviewed to determine whether or not your assessment that year is accurate and fair.

For more details regarding the real estate assessment and tax appeal process, please see the information and links provided by way of this blog under the Tax Appeals Articles or Property Tax Appeals Links headings.