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I often hear and know that New Jersey property taxes are High, I am surprised
most new Jerseys put up with it although many haven't and are considering leaving the state, in addition to other high taxes.
As I understand property taxes usually fall about 2% of the purchase or market value of a house, thus a $350,000 house may pay 7k in taxes, some a bit less and others a bit more than that.
However, I recently look at multi-million dollar homes in summit,nj for example, they were purchased atleast 10-20 years ago, a lot of people such as jim cramer live there, and it seems that there property taxes are more like 1% of the market value which is more or less the national average than so 2-3%,
However, this begs the question?
DO the wealthy pay the same high rate of property taxes or is there some state law limiting how much the rate can increase?
I have been looking at homes out of curiosity in summit, nj and various other places, I mean why would the wealthy tolerate high taxes and other high NJ taxes, there must be a catch
I also suspect they drive up the cost of living NJ.
Since they are determined within individual towns, what you are paying is a percentage of the bill or the town's budget. Your percentage is the value of your home/the value of the entire town.
If you have two towns that each have 100 homes and the same budget, but the value of the homes in one town are 300K and the value of the homes in the other town are 600K, the 300K homes will pay the same property tax as the 600K homes.
In summary, property tax in NJ can be regressive in some cases, when you compare across towns.
While I understand, it appears that homes in the same town, that are say worth 600-700 may be a higher rate (1.5%) than 1%.
If the wealthy come in, they drive up the cost of living for the average jersey person, now there is a lot of talk about high property taxes, but I am not sure about some of the wealthy, jim cramer pays 55k a year in taxes, but his home is worth 5.5 million or even 6-7 million, or 1% of market value in comparison to a person with a home worth 600-700k paying 11k in taxes, however
neil cavuto pays 100k in taxes even though the property is worth 6-7 million or less based on sales data, cramer bought his property a while ago.
Property taxes are not determined by present market values.
Property taxes are determined by an "assessed value" of the homes.
This is usually significantly below the market value.
There is no such thing as simply calculating 1 or 2% of the homes current value and knowing what the taxes are.
By way of example, I live in nice but not great town. High values in my area were approx. $475,000. Now I would be lucky to get $375,000.
My assessed value for tax purposes is in the neighborhood of $91,000. My current taxes for this year are almost exactly $8,400. This figure as you can see, actually represents approx. 9% of the assessed value.
This system even if confusing gives stability to the funding source to the towns and the county and not dependant on current market conditions.
I hope this helps.
EDIT:
To help you understand, If I were to sell my house for $200,000 the town would collect $8,400 in taxes...
If I were to sell my house for $500,000 the town would still collect the same $8.400 in taxes.
While I understand, it appears that homes in the same town, that are say worth 600-700 may be a higher rate (1.5%) than 1%.
If the wealthy come in, they drive up the cost of living for the average jersey person, now there is a lot of talk about high property taxes, but I am not sure about some of the wealthy, jim cramer pays 55k a year in taxes, but his home is worth 5.5 million or even 6-7 million, or 1% of market value in comparison to a person with a home worth 600-700k paying 11k in taxes, however
neil cavuto pays 100k in taxes even though the property is worth 6-7 million or less based on sales data, cramer bought his property a while ago.
You're comparing apples and oranges. You can only compare homes in the same town. Those should line up, and if not, then the town needs to reassess, which they do periodically.
Property taxes are not determined by present market values.
Property taxes are determined by an "assessed value" of the homes.
This is usually significantly below the market value.
There is no such thing as simply calculating 1 or 2% of the homes current value and knowing what the taxes are.
By way of example, I live in nice but not great town. High values in my area were approx. $475,000. Now I would be lucky to get $375,000.
My assessed value for tax purposes is in the neighborhood of $91,000. My current taxes for this year are almost exactly $8,400. This figure as you can see, actually represents approx. 9% of the assessed value.
This system even if confusing gives stability to the funding source to the towns and the county and not dependant on current market conditions.
I hope this helps.
EDIT:
To help you understand, If I were to sell my house for $200,000 the town would collect $8,400 in taxes...
If I were to sell my house for $500,000 the town would still collect the same $8.400 in taxes.
I understand that the assessed value is not the same as the market value, but isn't usually the assessed value a percentage of the market value that the county or tax authority determines the house to be worth.
I am trying to figure out if there is a special rule that prevents taxes from going up a certain percentage each month or if the assessor usually assesses property based on a percentage that is usually different or below market value.
You're comparing apples and oranges. You can only compare homes in the same town. Those should line up, and if not, then the town needs to reassess, which they do periodically.
I am comparing houses in the same town, with the exception of cavuto's house.
There a few other homes in summit that I have looked at and the tax values mismatch, perhaps the assessor needs to re-assess but I was looking for another explanation because certain states have limitations on assessed value such as prop 13 in California, amendment one in Florida, proposition 21/2 in Massachusetts,etc
How about counties, are they the major taxing agency, how about the state, do they get a large portion of the taxes or is mostly depending on town/school district.
The system sucks in most towns, because new construction gets hammered and they only reassess to "break everyone even" ever 10-20 yrs. A new million dollar home may have 20K taxes, but a home built 30 yrs ago that is worth a million today in the same town may only have 15K taxes or lower.
I am comparing houses in the same town, with the exception of cavuto's house.
There a few other homes in summit that I have looked at and the tax values mismatch, perhaps the assessor needs to re-assess but I was looking for another explanation because certain states have limitations on assessed value such as prop 13 in California, amendment one in Florida, proposition 21/2 in Massachusetts,etc
How about counties, are they the major taxing agency, how about the state, do they get a large portion of the taxes or is mostly depending on town/school district.
There are misalignments within towns for sure. Eventually, they are corrected by reassessments. However, there are vast differences between towns which is why you can't compares two homes in two different towns at all and expect to see parity.
As for the county, I believe the county "bills" each town for their services and then that bill is divided up among the property owners in the town as the town sees fit. They get a good chunk of the taxes, but the biggest expense are the school districts. You can usually see a breakdown of county, municipal and school district taxes on any property tax database (app.com has one under Data Universe).
So, the town has a total budget that must be paid for. Each owner pays their percentage of that budget. The percentage is determined by dividing your homes value/total property value of the entire town. This is multiplied times the total budget for your portion of the tax (broken into categories, county, municipal, school, etc).
This is why assessments often don't mean that much either. A town can reassess and some people will see no change in their tax bill, some will see a huge change, and some will see a decrease.
I don't know about limits on assessed value, it's probably that your house can't be assessed higher than the market value. You can appeal if you think their house is assessed too high (above market value).
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I understand, but
