If you currently own real estate in New Jersey, you have the singular pleasure of sharing in a property tax system that has the highest property tax rate as a percentage of property value (1.89%) according to www.tax-rates.org. If you are frustrated about the amount of property taxes you pay, there are a few things you can do about it:
- Move to another state. (My brother, who lives in Tuscon, Arizona, pays an amount of property taxes that I sincerely thought was a typo when I saw the listing a few years ago for the house he was under contract to buy).
- Move to a New Jersey municipality with a lower tax rate relative to property values. For example, Harding Township and Bedminster Township are at the top of many buyers’ lists of desirable places to buy a home in our area because of their favorable tax rates.
- Appeal your property taxes. To decide if you have a good chance of prevailing in an appeal of your taxes, you should collect some information:
1) Your 2012 tax assessment as published on the Tax Assessment Card (the little green card that will be arriving at the end of January or in early February from your municipality
2) Your municipality’s average tax ratio (The New Jersey Division of Taxation website includes the average tax ratios for municipalities in Hunterdon County, Somerset County, and Morris County).
3) Information about the sale prices of three to five homes comparable to yours in your township that sold (i.e., closed) between October 1, 2010 and October 1, 2011. The closer they are in style, square footage, acreage, and neighborhood to your home, the more likely they are to be considered comparable. Note that sales that are considered “distress sales,” e.g., foreclosures or short sales, may not be recognized as comparable sales because if they are anomalous in your neighborhood (this may not help you on your tax appeal, but it’s a good thing for your property’s market value if you don’t have a lot of distress sales in your market area).
So what do you do with this information? When you divide the total assessed value on your 2012 Tax Assessment Card by the average tax ratio for your municipality, you arrive at the property value that your municipality thinks your property was worth between October 1, 2010 and October 1, 2011 (which is the relevant period for this valuation for 2012 taxes). The same New Jersey Division of Taxation website will also give you the high and low margins of error for each town (+/- 15% around the average ratio).
Here’s an example: A homeowner in Tewksbury Township has a property for which the total assessment is $410,400. The average tax ratio for Tewksbury Township for 2012 is 78.67%. This means that the township thinks her house was worth $521,672.81 between October 1, 2010 and October 1, 2011. She believes this is not the case. However, the township is given a little latitude in its +/-15% margin, so since the upper limit for the township for the tax ratio is 90.47%, this hypothetical homeowner must show that her house was worth less than $453,631 in that period in order to prevail in her tax appeal.
For additional resources in appealing your taxes, a straightforward guide to property tax appeals in New Jersey is available in a brochure published by the state. If you have questions regarding the market value of your home as reflected by recently-closed properties similar to yours, contact Leaf, Realtors at 908-975-9756 for information specific to your property. Of course, if you want to move to Harding or Bedminster, or if you live there already and decide to move to Tucson, Arizona or anywhere else, contact us to find out about the Leaf, Realtors’ solutions for selling or buying a property in New Jersey in today’s real estate market.