By Adam Berkson
New Jersey residents pay more property tax per capita than in any other state—about 4.88 percent of the state's average per capita income, according to the 2009 State Business Tax Climate Index issued by the Tax Foundation. Adding to this already hefty burden, New Jersey Governor Jon Corzine recently unveiled part of his $29.8 billion budget that would eliminate property tax deductions on state income taxes and some property tax rebates. New Jersey homeowners are screaming, “No more!”
In the midst of this storm over tax deductions and rebates, it’s easy to overlook another serious problem that directly affects more than 700,000 New Jersey homeowners. That group, nearly a third of all residential property owners statewide, own homes that are currently over-assessed above the state’s 15 percent over-assessment margin. According to our research, these homeowners are overpaying their property taxes and could save an average of $1,919 annually by providing their county with sufficient evidence of their property’s over-assessment and the proper tax appeal forms.
Our research found that over-assessment is more prevalent, and savings could be more substantial, on higher-valued homes. For example, homes valued between $500,000 and $750,000 are over-assessed above the state’s over-assessment margin 32 percent of the time. Homes valued between $1,000,000 and $2,000,000 are typically over-assessed above the state’s over-assessment margin 35 percent of the time. A property tax appeal filed on behalf of these homeowners could potentially result in an average savings of 27 percent off their tax bill—or almost $5,000.
Over-assessment is more prevalent in a handful of select New Jersey counties. About 45 percent of residential properties in Ocean County are over-assessed above the state’s over-assessment margin, for example, while 35 percent and 34 percent of residential properties are over-assessed in Atlantic County and Sussex County, respectively. Among the numerous municipalities with at least half of properties over-assessed by more than the state’s 15 percent over-assessment margin are Teaneck (50 percent), Carteret (50 percent), Eatontown (51 percent), Lakewood (53 percent), and Hamburg (76 percent). These are just examples – there are many more.
Anecdotal reports suggest that despite these staggering statistics, potential savings and the looming property tax appeal deadline, which is April 1 in most municipalities (May 1 in municipalities reassessed this year), only a fraction of the state’s affected homeowners have filed appeals so far. This is not unusual, according to the New Jersey State Division of Taxation, as history has proven that very few New Jersey property owners file appeals on a year-by-year basis. In fact, only 28,825 property tax appeals were filed in 2008.
The number of property tax appeals in New Jersey has been low, despite the substantial upside in lowering one’s property tax bill, for a handful of reasons. First and foremost, many property owners do not understand the relationship between their property’s assessed value and its market value, and therefore do not realize that they are being over-taxed.
Property owners who do understand this relationship and recognize that they are being over-taxed may find it difficult to calculate whether or not their property’s over-assessment exceeds the state’s 15 percent over-assessment margin. Additionally, homeowners outside of the real-estate business do not have ready access to Multiple Listing Service (MLS) or other sources of sales information, making it very hard to find the comparable properties information that is required in order to file a property tax appeal. In addition, fine print governs that there are specific comparable sale dates that are allowed for this year’s appeal. Even if the information is gathered sufficiently, complicated calculations are required in order to determine a property’s correct assessment value.
Due to these obstacles, as well as others, property owners who do choose to file a property tax appeal usually begin by consulting an appraiser to determine the correct assessed value of their property, along with a lawyer who specializes in property tax appeals. These astute professionals make the process of filing a tax appeal seamless, but the cost, which, for instance might be $1,900 for the attorney’s fee alone, is usually a deterrent. Fortunately, there are now also a number of affordable and easy-to-use website services that can assist homeowners in completing a portion or all of the appeals process.
If you are concerned about your property taxes, you should begin yesterday to determine whether your home is one of the 700,000 over-payers. You can do so quickly by visiting EasyTaxFix.com and obtaining a free analysis of whether or not your home may be over-assessed. Then, go from there.
About the Author
Adam Berkson is Founder of www.EasyTaxFix.com. The user-friendly, web-based service uses an automated valuation methodology for analyzing individual home values versus their tax assessed values. If an individual homeowner is found to be over-assessed, the site offers a wizard to assist homeowners in completing their property tax appeal application for a low fee.
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