New Jersey Tax Appeals: Filing Deadlines Extended in Revalued and Reassessed Towns

dollar-sign-1317230-m-150x150As the April 1 tax appeal filing deadline quickly approaches, we would like to take a moment to remind our readers and our clients that some municipalities in New Jersey may have extended tax appeal filing deadlines as the result of a revaluations or re-assessments. In the towns that have been revalued or re-assessed, the filing deadlines are often extended to May 1.  In Middlesex County, the affected towns are New Brunswick and Carteret. In Ocean County, the towns of Lakewood, Beach Haven and Ship Bottom will all be revalued or re-assessed.

What is a Revaluation or Re-Assessment?

In New Jersey, the real estate tax that you pay based upon how much your assessor thinks your house or property is worth. However, real estate values are continuously changing and it would not be practical for the assessor to re-compute the values of every property in town every year. Therefore, after assigning assessments to every property in a town, the assessor may wait several years before deciding to repeat that process. In the meantime, the town will simply increase the tax rate each year in order to accommodate the increases in budget. Since real estate values are generally increasing (and not decreasing), towns that have waited several years to conduct a revaluation or re-assessment may have assessments that eventually represent only a small fraction of the properties’ actual values. [You may click here to see your town’s equalization ratio] When this occurs, the County Tax Board may compel the municipality to conduct a revaluation or re-assessment. This may also occur in cases where, due to shifts in the economy of the municipality, the assessments are no longer fairly distributed.

For the purposes of this article, we will use the terms “revaluation” and “re-assessment” interchangeably, although the former term refers to a process that generally involves a revaluation company, and the latter term refers to a process in which the assessor’s office performs the analysis. Taxpayers, who only notice that their assessments have dramatically increased, may be prone to misunderstand the impact of the revaluation. The fact is that the revaluation or re-assessment should not have any significant impact on the total revenue of the taxing district. As the assessments are increased, the tax rates are decreased. The municipal budgets are generally not increasing more than a few percentage points per year. Notwithstanding this fact, we would be remiss if we were to conclude that none of the taxpayers would be affected by a revaluation. On the contrary, the revaluation will necessarily leave certain taxpayers bearing a lower percentage of the tax burden, and certain taxpayers bearing a higher percentage of the tax burden, while the majority of taxpayers may not notice any impact.

The best way to forecast whether you will be affected by the revaluation is to divide your old assessment by the town’s equalization ratio for the prior year. This quotient is known as the True Value Assessment of the property. If the true value assessment of your property from the previous year is lower than the current year’s re-assessed value, the chances are that your taxes are going to increase. If the true value assessment from the previous year is equal to or higher than the current year’s assessment, the taxes will probably be about the same or lower than they were in prior years.

Sometimes the change in the true value assessment is indicative of changes in the market conditions of the town. Certain neighborhoods may have become more valuable as other neighborhoods have become less valuable. Statistically, we would expect to see the most fluctuation in the value of higher priced properties. However, regardless of the reason for the change in assessment, there will usually be some properties in a town that are over-assessed. In the event that your new assessment exceeds the value of your property, please call our office to discuss whether a tax appeal would be worthwhile in pursuing.