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Old 02-16-2017, 12:09 PM
 
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Applying averages...

$24k in Montclair and Glen Ridge / 3.5% tax / average 80% assessment = ~850k market value. Average home that is decently brought up to today's standards is $330 PSF, so that is a ~2,500 SF house. Average plot is a fifth of an acre.

Assuming 25% down pmt, that is magically a monthly escrow of exactly $5k for a full size house...<15 miles due west of NYC where a 2 bdrm rental is a similar monthly amount.

Last edited by JaRuss01; 02-16-2017 at 12:19 PM..
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Old 02-16-2017, 02:08 PM
 
2,161 posts, read 4,278,060 times
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Originally Posted by Craig-D View Post
I'm in Bergen County and my taxes are $19.3k on a 2650 Sq Ft house.

It's not a million dollar house and it's of modest size. So why are my taxes so high you ask? Because it's new construction and thus assessed at full market value. Most people with older homes and/or homes that were renovated without pulling permits don't have assessments that reflect actual market value. You should all pray your town doesn't undergo revaluation. Otherwise you're in for a rude awakening of what your tax bill should really be.
Well, a new construction house will naturally have higher property taxes just for the fact that it is worth more than the dilapidated murder house down the street of similar size. But everyone should be taxed at an equal rate. I thought that's what the equalization ratio was for? For new construction, you'd multiply your town's general tax rate by the equalization ratio. So if all the older houses in town are assessed at only 80% of true market value, the equalization ratio would be .80. You pay 80% of the general tax rate. So if those older houses are paying a general tax rate of 2.5%, your property tax rate would be 0.8 x 0.025 = 0.02, or 2%. At least for the first year. That's what I was told when I was considering some new construction properties several years ago. But I don't really know what your exact situation is. The effective tax rate in some Bergen County towns is 3+%...maybe your town just has higher than average taxes. If you think you are over-assessed, definitely look into it.

I've been through a reval twice (2 different properties, 2 different towns). Both not new construction at all. My taxes went up a negligible amount in each case, but I decided to contest it anyway because it was a good opportunity to kind of quasi-appeal my taxes for free. When I went in for the meeting with the reval company, I went with the spreadsheets of all the new assessments in town, and indoor/outdoor pictures of my home, and made my case that they had over-assessed me compared to my neighbors with comparable houses/yards. The response I got was yeah, lady, that's because when you don't let us in your house (I didn't let them in the house), we automatically assess you at the upper end of the range, with the assumption that you've made some basic routine updates/renovations...but now that we see the pictures of your cheesy builder grade kitchen cabinets and bathroom fixtures, we will lower your assessment a little. And then that lowered my property taxes...but again, by a negligible amount. Nothing to cheer about.

I don't think cosmetic renovations really affect property taxes that much. It's only something like a full on addition which adds square feet, or an addition of a deck, and some other stuff like that, that would make much of a difference. And yeah, people who do that kind of stuff without permits deserve all the tax pain that will rain down on them during a reval. (They will also be in for a lot of trouble if they ever have to move and sell.)
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Old 02-16-2017, 02:13 PM
 
2,161 posts, read 4,278,060 times
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Originally Posted by RonaldusMagnus View Post
Been house hunting in the Ridgewood area for a while, I can verify that YES, about $1m w around $22k+ for about 2500sq ft decently updated house with a small yard.
Ok, I stand firmly, firmly corrected. I knew places like Saddle River, Franklin Lakes and some other towns had numbers like that, but didn't know that places like Ridgewood did.

On the plus side, you have a sweet $1 million budget. You probably want more house for your money, but I mean, Bergen County real estate is that expensive because it's that desirable...closest to the city (but still bucolic and scenic), good train lines, shorter commutes, nice amenities, etc. etc. At least in the towns mentioned here. You can get a bigger house and yard for that price tag out by me in Morris County, but then...you know...you'd be all the way out by me in Morris County.

~$20k property taxes on a $1 million house is pretty standard for NJ. 2%, give or take.
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Old 02-16-2017, 03:57 PM
 
789 posts, read 545,798 times
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Originally Posted by Docendo discimus View Post
Ok, I stand firmly, firmly corrected. I knew places like Saddle River, Franklin Lakes and some other towns had numbers like that, but didn't know that places like Ridgewood did.

On the plus side, you have a sweet $1 million budget. You probably want more house for your money, but I mean, Bergen County real estate is that expensive because it's that desirable...closest to the city (but still bucolic and scenic), good train lines, shorter commutes, nice amenities, etc. etc. At least in the towns mentioned here. You can get a bigger house and yard for that price tag out by me in Morris County, but then...you know...you'd be all the way out by me in Morris County.

~$20k property taxes on a $1 million house is pretty standard for NJ. 2%, give or take.
Franklin Lakes actually has much lower property taxes than Ridgewood. Saddle River has about the lowest or close to the lowest property taxes per $mil in the state.
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Old 02-16-2017, 04:12 PM
 
229 posts, read 191,262 times
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Quote:
Originally Posted by Docendo discimus View Post
Well, a new construction house will naturally have higher property taxes just for the fact that it is worth more than the dilapidated murder house down the street of similar size. But everyone should be taxed at an equal rate. I thought that's what the equalization ratio was for? For new construction, you'd multiply your town's general tax rate by the equalization ratio. So if all the older houses in town are assessed at only 80% of true market value, the equalization ratio would be .80. You pay 80% of the general tax rate. So if those older houses are paying a general tax rate of 2.5%, your property tax rate would be 0.8 x 0.025 = 0.02, or 2%. At least for the first year. That's what I was told when I was considering some new construction properties several years ago. But I don't really know what your exact situation is. The effective tax rate in some Bergen County towns is 3+%...maybe your town just has higher than average taxes. If you think you are over-assessed, definitely look into it.

I've been through a reval twice (2 different properties, 2 different towns). Both not new construction at all. My taxes went up a negligible amount in each case, but I decided to contest it anyway because it was a good opportunity to kind of quasi-appeal my taxes for free. When I went in for the meeting with the reval company, I went with the spreadsheets of all the new assessments in town, and indoor/outdoor pictures of my home, and made my case that they had over-assessed me compared to my neighbors with comparable houses/yards. The response I got was yeah, lady, that's because when you don't let us in your house (I didn't let them in the house), we automatically assess you at the upper end of the range, with the assumption that you've made some basic routine updates/renovations...but now that we see the pictures of your cheesy builder grade kitchen cabinets and bathroom fixtures, we will lower your assessment a little. And then that lowered my property taxes...but again, by a negligible amount. Nothing to cheer about.

I don't think cosmetic renovations really affect property taxes that much. It's only something like a full on addition which adds square feet, or an addition of a deck, and some other stuff like that, that would make much of a difference. And yeah, people who do that kind of stuff without permits deserve all the tax pain that will rain down on them during a reval. (They will also be in for a lot of trouble if they ever have to move and sell.)
All new construction and reassessed renovations by definition have an equalization ratio of 100%. It doesn't matter what the equalization ratio is for older homes in the same town. On a newly built or renovated home you're paying full freight on full market value. My assessment is based on 100% of its market value - which is the sales price. That's why new construction is so highly taxed. It's also why people who renovate try to avoid pulling permits - because that triggers a new visit from the tax assessor.

This is why people with new construction or permitted renovations love revals. Everyone else in town joins us at a 100% equalization ratio. That usually means a tax decrease for the new construction/renovated home owner because of the extra revenue generated by everyone else paying their fair share finally.

As an example, an older home in a town that sells for $800k might commonly have an outdated assessment of something like $600k. Whereas a new home that sells for $800k is assessed at the full $800k. So even with an equalization ratio in place, the person in the newer home in this scenario is getting killed and is subsidizing the owner of the older home, despite both having equal market value.

There's no appealing the assessment of a new home. You can only appeal when the assessment exceeds market value by 15% or more in NJ. How do you argue your assessment is wrong when it's based on what you actually paid for the property? So while most people in a town dread revals, those in recently built or renovated homes can't wait for them. Because our assessment won't increase and everyone else's will. So It almost always means a tax decrease for us. Because towns don't pocket the extra money from town-wide increased assessments. The tax levy remains a constant, so the tax rate is lowered to compensate. So those whose assessments didn't change get a tax reduction. Conversely those with increased assessments pay more - though the lowered tax rate softens the blow.

The only way to truly make property taxes fair among property of various ages would be to do yearly revals - which of course is not realistic.
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Old 02-16-2017, 04:22 PM
 
229 posts, read 191,262 times
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Quote:
Originally Posted by Docendo discimus View Post
Ok, I stand firmly, firmly corrected. I knew places like Saddle River, Franklin Lakes and some other towns had numbers like that, but didn't know that places like Ridgewood did.

On the plus side, you have a sweet $1 million budget. You probably want more house for your money, but I mean, Bergen County real estate is that expensive because it's that desirable...closest to the city (but still bucolic and scenic), good train lines, shorter commutes, nice amenities, etc. etc. At least in the towns mentioned here. You can get a bigger house and yard for that price tag out by me in Morris County, but then...you know...you'd be all the way out by me in Morris County.

~$20k property taxes on a $1 million house is pretty standard for NJ. 2%, give or take.
That depends on the town. The upscale towns like Saddle River and Alpine have low tax rates (usually below 1%) because the rateables are so high with lots of multimillion dollar homes to go around. Contrast that with a town like Irvington, which has a tax rate over 5% - made necessary because the real estate isn't worth much. For a $20k tax bill on a house assessed at $1mm, you're in a town with a 2% tax rate. Try putting that same home in the typical Essex County town like West Orange. You're taxes will be closer to $35k.
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Old 02-16-2017, 04:48 PM
 
229 posts, read 191,262 times
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Quote:
Originally Posted by JaRuss01 View Post
Applying averages...

$24k in Montclair and Glen Ridge / 3.5% tax / average 80% assessment = ~850k market value. Average home that is decently brought up to today's standards is $330 PSF, so that is a ~2,500 SF house. Average plot is a fifth of an acre.

Assuming 25% down pmt, that is magically a monthly escrow of exactly $5k for a full size house...<15 miles due west of NYC where a 2 bdrm rental is a similar monthly amount.
We househunted in West Orange and were seeing $24k taxes on $750k houses, so I think taxes would be higher than you're estimating on an $850k home. I think the tax rates in those Essex County towns are all pretty similar. Which is why we stayed away. Not that Bergen is all that much better.

I think it's hilarious that you can go to a state like Georgia or North Carolina and pay $3k a year in taxes on a $750k house. I'd love to know how the municipalities down there have enough revenue to operate with such low tax levies.
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Old 02-16-2017, 08:59 PM
 
9,806 posts, read 16,115,163 times
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Quote:
Originally Posted by Craig-D View Post
We househunted in West Orange and were seeing $24k taxes on $750k houses, so I think taxes would be higher than you're estimating on an $850k home. I think the tax rates in those Essex County towns are all pretty similar. Which is why we stayed away. Not that Bergen is all that much better.
Nope, West Orange is much higher than some other Essex towns. About twice Millburn, last I checked.

It's not true that equalization ratio is 100% for new construction. Equalization ratio is uniform throughout the town. So if Ye Olde Murder House is assessed at $300,000 and has an FMV of $400,000, then a new construction house with an FMV of $800,000 will have an assessment of $600,000.
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Old 02-16-2017, 10:42 PM
 
229 posts, read 191,262 times
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Originally Posted by nybbler View Post
Nope, West Orange is much higher than some other Essex towns. About twice Millburn, last I checked.

It's not true that equalization ratio is 100% for new construction. Equalization ratio is uniform throughout the town. So if Ye Olde Murder House is assessed at $300,000 and has an FMV of $400,000, then a new construction house with an FMV of $800,000 will have an assessment of $600,000.
Sorry but you're mistaken. How do I know that? Because I actually happen to live in new construction. So my statement is not based on the theoretical or hypothetical. The tax assessment and the purchase price of my home (which is obviously FMV) are the same exact number.

And when I stated West Orange had similar taxes, I wasn't referring to all of Essex county. I was referring to the Essex towns specifically mentioned in the the post I was responding to - which were Glen Ridge and Montclair. The 2015 tax rates of those three towns were: Glen Ridge 3.426, West Orange 3.817, and Montclair 3.526
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Old 02-17-2017, 08:10 AM
 
2,393 posts, read 1,467,573 times
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Quote:
Originally Posted by Craig-D View Post
I think it's hilarious that you can go to a state like Georgia or North Carolina and pay $3k a year in taxes on a $750k house. I'd love to know how the municipalities down there have enough revenue to operate with such low tax levies.

This has been discussed in detail. How are their schools and other municipal services? Do they provide any? If you have more than one kid and you send them to private schools then NJ property taxes for decent schools is a good value...
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