Tax appeal season

With the start of the new year, it’s time to think seriously about appealing the tax assessment on your property (ies).  If your property is assessed for more than it is actually worth, then by definition, you are paying more than your fair share of the tax burden for your municipality. Keep in mind, the actual dollar amount of the property assessment is not necessarily the taxable value being applied for tax purposes. In New Jersey, property tax assessments are based upon what is known as the “Assessor’s True Value” of the property. This figure can be calculated fairly easily, by dividing the tax assessment by the Equalization Ratio for the tax year in question. For example:

A property located in Montgomery Township, Somerset County is assessed at $750,000. The Chapter 123 (Equalization) Ratio for 2014 tax appeals is 83.58%. Therefore, the 2014 Assessor’s True value for this property, for tax assessment purposes, is actually $897,344 ($750,000 divided by .8358). Without being aware of the Equalization Ratio (and what it means with respect to how exactly your property is being assessed), you might mistakenly believe that your property tax assessment is accurate. If you owned this property, and thought that $750,000 was a fairly accurate value estimate, then your assessment would actually be nearly 20% too high!