Each year, our office fields phone calls from taxpayers who are interested in appealing their tax assessments. Many taxpayers who are eligible for our services ask us what the best evidence is to prove that their properties are over-assessed. For these inquiries, we generally note that an appraisal report, estimating the value of the property as of October 1 of the pre-tax year is usually the best evidence.
There are several reasons why appraisal reports are great evidence in tax appeal hearings. One of the reasons for this is that the appraiser can apply adjustments to sale prices to account for differences in location, size, quality of construction, and amenities, just to name a few factors. The appraiser will usually start by looking for the sales that require the fewest monetary adjustments. But sometimes, sales of properties that are really comparable are not available, and therefore, adjustments are applied. The other significant reason why appraisal reports are so helpful is that the appraisers who prepare them are generally very skilled at presenting their data in a way that the County Tax Board or the Tax Court will understand, no matter how complicated the adjustments tend to be.
While there are many advantages of getting an appraisal for a tax appeal, there are a lot of cases where it may not make sense to do so. These cases include matters where there are several identical comparable sales. The best example is an appeal of the assessment of a condominium, in a community where several other identical condominiums have recently sold. Another example of a matter where the taxpayer would not necessarily want to order an appraisal is a property where the anticipated tax savings will not be sufficient to justify the cost of an appraisal. Unlike our firm, which offers tax appeal representation on a contingent fee basis, the appraiser who is retained as the expert witness is prohibited from doing so under the Uniform Standards of Professional Appraisal Practice (USPAP), which sets forth that an appraiser should not have any financial interest in the outcome of the appraisal report that he or she is preparing. Therefore, an appraiser will charge the same flat fee, regardless of whether the case is successful.
In any tax appeal case where an appraisal is not submitted, it is up to the taxpayer to submit other evidence to support the reduction of assessment. For residential properties, we generally recommend using comparable sales. The houses should be of similar location, size, condition and amenities. Taxpayers should note that since the assessing date is October 1 of the pretax year, sales that occurred more than a few months after that date may be deemed to be inadmissible.
Other evidence that the taxpayer might submit may include photographs, engineering and environmental reports and wetlands delineations. In the case of income producing properties, an income and expense statement is almost always submitted. In all cases where an expert witness is not retained, the taxpayer must still produce a witness who will testify at the hearing. That witness is often the taxpayer, who may testify about the location, size and condition of his or her house, and then may testify about the comparable properties that were submitted as evidence. Please note that the taxpayer’s attorney cannot testify and cannot act as a witness. The attorney may only offer into evidence information that his or her witness is present to discuss.
Finally, and most importantly, all evidence that the taxpayer intends to discuss at the tax appeal hearing must be submitted to the Tax Board and the municipality at lease one week prior to the hearing date. In cases where the taxpayer is unable to gather evidence in advance, we will often assist in the information gathering process. For more information regarding Tax Appeals, please contact our office.