Tax appeal seminar
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Transcript of Tax appeal seminar
Presented by:Jeffrey M. Gradone, Esq.
Understanding the Residential Tax Appeal Process
How Assessments are Set
Revaluation Basics
Site Inspection• Letters sent to property owners advising of
inspection.• If no one is home, exterior inspections made.• Follow-up appointments are scheduled.• If no one is home for the second visit, the
property owner is asked to schedule a time for inspection, otherwise the interior will be estimated.
Revaluation Basics
Data Collected During Inspection
• Building measurements
• Number of bedrooms, bathrooms, finished basements, porches, etc.
• Type, quality and age of construction
Revaluation Basics
Delineation of Neighborhoods
• The revaluation company, with the assistance of the municipal tax assessor, determines neighborhoods for purposes of valuation.
• Neighborhoods are delineated based on similarities.
Revaluation Basics
Use of Comparable Sales
• Sales are analyzed to determine whether sale prices are indicative of fair market value.
• Sale properties are inspected using the same guidelines as inspections for all properties in the municipality.
Revaluation Basics
Land Value Extraction
• Value of site improvements is determined through calculation of reproduction costs, minus depreciation.
• Value of site improvements is subtracted from sale price to determine land value.
Revaluation Basics
Land Value Extraction
• Land value is time-adjusted for applicable valuation date.
• Land value is also adjusted for site specific characteristics (location, slope, etc.).
• Land formula is derived for each neighborhood.
Revaluation Basics
Calculation of Assessment
• Land Value− Land formula is applied to subject property.
− Adjustments are made for size, location and other site specific attributes.
Revaluation Basics
Calculation of Assessment
• Improvement Value− Reproduction cost is calculated based on building class and
improvement square footage.
− Effective age of the improvement is determined and corresponding depreciation is applied to reproduction cost.
• Total Value = Land Value + Improvement Value
To Appeal or Not to Appeal
Tax Appeal Basics
Market Valuex Ratio
Assessmentx Tax Rate
Property Taxes
Challenge this
Don’t directly challenge this
Cannot challenge this
Should I File?
• Assessed value ≠ Market value
• Convert assessment using “average ratio”
Assessment ÷ Ratio = Assessed fmv
East Orange, NJ
Assessed Value Ratio Market Value
2013 10,000,000
2014 10,000,000
2015 10,000,000
2016 10,000,000 91.95% 10,875,476
2017 10,000,000 91.56% 10,921,800
100%
86.77%%
89.90%
10,000,000
11,524,720
11,123,470
Should I File?
• Example− Assessment = $2,000,000− Appraiser’s fmv estimate = $10,000,000− Good Case?
• City of Elizabeth’s ratio – 13.09% $2,000,000 AV ÷ .1309 = $15,278,839 AFMV
Should I File?
Other Considerations
• Chapter 123− 15% statutory “leeway” for the assessor
• Increased assessments− 15% protection for taxpayer
Should I File?
Ratio Lower Limit Upper Limit (For Increase) (For Reduction)
New Brunswick 38.84% 33.01% 44.67%
$500,000 $ 1,287,333 $1,514,693 $1,119,319
Should I File?
Other Considerations
• Cost/Benefit Analysis− Example
• Madison – 1.840% tax rate
• 1.840% tax rate - $1,840 savings for $100,000 reduction
The Appeal Process
Where & When
• Total assessment $1,000,000 or less County Board of Taxation• Total assessment greater than $1,000,000 CBT or Tax Court
Unless Monmouth
County, then January 15,or 45 days
from mailing of assessment
Regular Annual Assessment April 1,
or 45 days from mailing of assessment
Unless a revaluation or reassessment
then May 1
Unless an added, omitted or roll-back assessment, then December 1,
WITH EXCEPTIONS!!!or 30 days from the mailing of assessment
Other Concerns
• Standing− Owner− Other aggrieved “taxpayers” – tenants
• Payment of taxes− Appeal dismissed for non-payment− Two statutes with technical differences
• Direct appeals – “cure” opportunity at Board of Court• Appeal to Tax Court from Board – no “cure”
• Lack of Prosecution at the County Board− Cases – mostly for unexcused failure to appear− Small efforts typically deemed sufficient by Tax Court
• Chapter 91 Requests
Other Concerns
• Spot Assessment– Reassessment upon sale– Assessment maintenance
• “Reverse” Appeals– Seek to increase assessments!– Increasingly more common!– Taxing districts and occasional 3rd parties