Real estate assessments are based upon the value of the real estate as of October 1st of the prior year. Notices of Assessment must be mailed by municipalities to record owners postmarked by February 1st of each year. Therefore, now is the time to determine if your property is over-assessed and qualifies for appeal.
Certain commercial tenants may appeal their taxes, if the applicable lease obligates them to pay the real estate taxes. For commercial properties containing many tenants, it is important to consult with an attorney to confirm whether an appealing tenant will qualify to represent the interests of all tenants in the appeal, and be allowed to proceed.
If a property is over-assessed, the owner or tenant is paying too much in real estate taxes. However, whether the assessment qualifies for appeal is based upon ratios. An owner or qualifying tenant may only appeal an assessment if the true market value of the property, compared to the assessment, exceeds 15% of the municipality’s common level ratio. If the appeal is successful, the assessment is reduced to the agreed upon true market value multiplied by the common level, resulting in a reduction in real estate taxes.
With respect to income generating properties, pursuant to N.J.S.A. 54:4-34 (also known as Chapter 91 demand), property owners must provide to municipal assessors income and expense data relevant to assessing property value. Landowners who failed to respond to prior Chapter 91 demands are barred from appealing their taxes, unless good cause is shown for the failure to respond. This is a difficult standard to meet.
Tax assessment appeals must be filed (as in received, not mailed) on or before April 1st, with very limited exceptions. Late filing will not be accepted. Applications must be supported by credible evidence of the True Market Value. Most appeals are filed with the County Board of Taxation. Properties in excess of $1 million may be filed with the State Tax Court or with the County Board of Taxation. If the case is not settled, a hearing will be conducted.
Nicole L. Voigt is experienced with both commercial and residential tax assessment appeals and works with a network of appraisers who serve as expert witnesses for commercial appeals. For anyone interested in appealing, it is best to contact an attorney soon after receiving the notice of assessment, to ensure attorney availability and avoid last-minute filings.