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Silver Lining in Real Estate Decline

In this new year as we witness residential and commercial real estate values declining throughout the region and the country, there is relief which is available to taxpayers.

In New Jersey, taxpayers can file an appeal of their tax assessment to either the County Board of Taxation or the State Tax Court on or before April 1 of each year. An appeal, if successful, will result in a reduction which will be retroactive to the first of the year. In addition, an appeal, if successful, will generally insulate a taxpayer from future tax assessment increases for at least two years assuming that the property does not change and the municipality does not perform a municipal-wide revaluation.

Those considering an appeal should, as a first step, review the tax assessment on their property. It must be kept in mind that municipalities do not assess at 100% of true value. In Atlantic County, some representative ratios of assessed value to true value are, for example: Atlantic City: 91%, Egg Harbor Township: 47%, Galloway Township: 48%, Hamilton Township: 46%, Hammonton: 55%, Linwood: 62%, Northfield: 45% and Somers Point: 44%. In Cape May County, some representative ratios of assessed value to true value are, for example: Avalon: 100%, Cape May City: 82%, Middle Township, North Wildwood and Upper Township: 100%, Sea Isle: 97% and Stone Harbor: 75%. When a community assesses at 50% of fair market value that means that an assessment of $500,000 reflects a fair market value of $1,000,000.

Fair market value is determined based upon comparable sales, in the case of commercial properties, the ability of a property to generate income and in some cases based upon the cost of construction.

If you think your property may qualify for a tax appeal in the upcoming year, please feel free to contact Sal Perillo at (609) 927-1177 or by email at sperillo@npdlaw.com. Sal has over 30 years of experience representing taxpayers all throughout the State of New Jersey.