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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 Value
x Ratio
Assessment
x 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

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Tax appeal seminar

  • 1. Presented by: Jeffrey M. Gradone, Esq. Understanding the Residential Tax Appeal Process
  • 3. 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.
  • 4. Revaluation Basics Data Collected During Inspection • Building measurements • Number of bedrooms, bathrooms, finished basements, porches, etc. • Type, quality and age of construction
  • 5. 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.
  • 6. 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.
  • 7. 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.
  • 8. 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.
  • 9. 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.
  • 10. 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
  • 11. To Appeal or Not to Appeal
  • 12. Tax Appeal Basics Market Value x Ratio Assessment x Tax Rate Property Taxes  Challenge this  Don’t directly challenge this  Cannot challenge this
  • 13. Should I File? • Assessed value ≠ Market value • Convert assessment using “average ratio” Assessment ÷ Ratio = Assessed fmv
  • 14. 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
  • 15. 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
  • 16. Should I File? Other Considerations • Chapter 123 − 15% statutory “leeway” for the assessor • Increased assessments − 15% protection for taxpayer
  • 17. 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
  • 18. 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
  • 20. 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
  • 21. 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
  • 22. Other Concerns • Spot Assessment – Reassessment upon sale – Assessment maintenance • “Reverse” Appeals – Seek to increase assessments! – Increasingly more common! – Taxing districts and occasional 3rd parties