ATLANTIC CITY—New Jersey homeowners pay the highest property taxes in the nation, and many will be paying more than they should this year. That’s because the assessed value of properties for tax purposes may be significantly higher than their current value as a result of falling home prices.
This is especially true for municipalities where a revaluation of properties was conducted at or near the peak of the real estate bubble, according to attorney Michael Sklar, a partner with the firm Levine Staller here.
“Atlantic City is a case in point because the reval occurred close to the top (of real estate prices),” Sklar said Tuesday. “That’s why taxpayers need to take a look at their assessments, and if they’re too high, they should really consider filing an appeal.”
And if an appeal is warranted, they’d better file it with their county board of taxation soon. Appeals must be in the hands of the county board of taxation by April 1.
A homeowner can determine whether his or her tax assessment is accurate by comparing it to recent sale prices for comparable properties in the same area.
Sklar said in most cases, homeowners should file the appeal of their assessment themselves, usually without assistance, but sometimes after consulting with a broker, appraiser or lawyer.
The one-page appeal form (with two pages of instructions) is available at their county tax board and online from the state at
http://www.state.nj.us/treasury/taxation/pdf/other_forms/lpt/petappl.pdf
Sklar said his firm primarily deals with commercial properties, from condos to casino hotels, and generally doesn’t handle residential properties.
As an example of shifting property values, he described a city condominium whose manager considered appealing its assessment last year but found it wasn’t justified by prices then.
“They said, let’s take another look in 2009, so we did and now there are some sales that support filing an appeal,” Sklar said. Those sales suggest that the actual value of condo units there is about $100,000 lower than their assessments.
The main challenge for homeowners is finding comparable properties that have sold recently, a task made far more difficult by the severe slump in the housing industry.
Joe Corcoran, a certified residential appraiser with Kevin Corcoran Real Estate here, said factors such as square footage and location are critical to comparing property values.
“Something at the south end of Atlantic City, say in lower Chelsea, will be completely different than something on the west side of Atlantic City,” Corcoran said.
Appraisers have the knowledge of markets and homes to adjust properties to make them more comparable for tax-appeal purposes, he and Sklar said.
“For example, if one house has an extra half a bath, that might be worth $5,000 more,” Corcoran said. Other key factors include amenities and property condition.
He said appeals are up substantially this year due to the fall in home prices, particularly where there was a reassessment.
“Brigantine did a reassessment at the top of the market,” he said.
Homeowners can submit comparable sales with their appeal, or they can file the appeal now and provide them at least seven days prior to the appeal hearing, Sklar said.
The good news for homeowners is that if their appeal is successful, the lowered assessment will stay in place for the current tax year and two more years, he said. Only in the case of an addition or other change to the property or a revaluation of the municipality can it be changed before then.
The bad news is that those who don’t appeal an assessment that is too high will pay too much in property taxes.
“The people who don’t file will end up paying for the reduction of the guy who did appeal,” Sklar said.