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are they going to go down? Lets face it, housing prices are going to drop probably another 30% before they are done in NJ. Are towns just gonna have 30% less revenue?
No, your property taxes will not be reduced, because...
Quote:
Originally Posted by GiantRutgersfan
are they going to go down? Lets face it, housing prices are going to drop probably another 30% before they are done in NJ. Are towns just gonna have 30% less revenue? How is this all going to work?
Copying a post of mine from last year:
Every property in your town is allegedly assessed at market value during a town-wide reassessment. Thereafter, the annual taxes are adjusted on a town-wide basis based on a factor known as the Equalization Ratio or the "Chapter 1-2-3 Ratio."
Here's the problem: You're assessed at $500,000 and the value of your property is now only $350,000 so you feel entitled to a 30% reduction in property taxes because your house is now worth less than the assessment. But stop and think about that for a minute.
In theory, every house in town should be worth about 30% less, just as yours is. But the town still needs to raise 100% of its operating costs. So if they reassessed you for 30% less, they'd reassess the whole town for 30% less. Once reassessed, the town would raise the tax rate so it could still attain the required revenue.
Let's say the tax rate is 1.2. For a $500,000 assessment, your tax is $6000 (5000 "hundreds" at $1.20 per hundred).
Now your assessment is dropped to $350,000. You're happy!
And everyone else in your town gets a 30% assessment reduction too. They're happy!
But the town still needs to raise enough money to meet its budget, so it raises the tax rate to $1.72. You're all unhappy.
How much will you actually pay? You'll pay $6020 (3500 "hundreds" at $1.72 per hundred). No significant change.
In essence, this is what the Chapter 1-2-3 Ratio does without requiring an annual property-by-property reassessment. It subjects your tax assessment to a market comparison factor.
In the above example, the Ratio would be 143.00. Here's how it works:
Take the assessed value and divide it by the ratio for your town to attain your homes approximate market value. $500,000 / 1.43 = $349,650.
Ratios for every town in NJ can be found here: http://www.state.nj.us/treasury/taxa...3statewide.pdf (http://www.state.nj.us/treasury/taxation/pdf/lpt/chap123/chapter123statewide.pdf - broken link)
Still think you're over-assessed? Maybe you are.
There's a simple way to determine if your tax appeal stands a chance for success. Divide your assessed value by the "lower limit" ratio for your town as shown in the chart. If the result you attain is higher than your estimated market value, you may have cause for an appeal. If not, forgeddaboudit!
(When I ran the numbers on my house, I discovered that I'm probably under-assessed. Mums the word.) There's a problem with the link given above. The state has apparently removed the statewide list from the website.
Try this instead: http://www.state.nj.us/treasury/taxation/pdf/lpt/chap123/chap123mor.pdf (broken link)
(The link for your county can be obtained by playing around with the last three letters before .pdf)
For more info and to see if you have a good chance at winning an appeal, try: NJ Tax Appeal
Last edited by MaverickDD; 04-22-2009 at 03:38 PM..
Reason: Incorrect link
As Maverick said, they'll just do a full re-assessment and/or adjust the rates to keep their revenue the same- they're not going to take a 30% hit on tax revenue just because values went down, just like they didn't see a 200% increase in revenues when values doubled to tripled from 1999-2006. A lot of municipalities across the country are hurting because they saw development slow, so they're not getting the revenue they projected from the new development that was expected, but it's a short-term hit- they'll make it up as soon as they can do the reassessments, or they'll leave the assessments as is, adjust the tax rates accordingly based on the current assessments, and just deal with the small % of the population that will challenge their assessed values. Once the number of challenges get too great, they'll just reassess the whole town rather than deal with the challenges.
Maverick, I would assume the "assessed value" you are speaking of is the amount that is printed on my tax bill? If so, lets say 250,000 is printed (Land + structure(s)) and the lower limit rate for my town is 38.92 based on the .pdf (=6423.43) Does this mean if my yearly taxes are higher than 6500 I am paying too much?
Maverick, I would assume the "assessed value" you are speaking of is the amount that is printed on my tax bill? If so, lets say 250,000 is printed (Land + structure(s)) and the lower limit rate for my town is 38.92 based on the .pdf (=6423.43) Does this mean if my yearly taxes are higher than 6500 I am paying too much?
Yes, to the first part of your question. The assessed value is the amount printed on your tax bill.
No, to the second part of your question. This gets complicated quite quickly, (and at times I think the government purposely creates arithmetic complexities in order to prevent us from clearly understanding how taxes are calculated ,) but I'll explain as best as I can:
Forget the actual tax bill for a moment. The amount you're billed for property tax is the tax rate times the assessed value, but that's not what the Chapter 1-2-3 ratio is for. This ratio deals only with how your assessed value should be reconciled to the approximate market value of your property.
Let's begin with the average ratio. As you mention, for your town the lower limit from the Chapter 123 chart is 38.92, hence the average ratio that appears on the chart for your town should be about 45.79, correct? Divide your assessment by the average ratio to get the approximate market value of your home: $250,000 / 45.79% = $545,971. Hence, your home is assumed to have a market value of approximately $545,971 based on the tax assessment.
Property taxes cannot be appealed unless the "error" in assessment exceeds 15%. (Yes, a municipality may over or under assess you by up to 15% and neither you nor the town can get legal redress.)
Dividing your assessment by the lower limit ratio gives you the maximum amount your home should be worth: $250,000 / 38.92% = $642,343. Hence, if the market value of your home is more than $642,343, you are under-assessed. The town may appeal and seek to charge you more.
Dividing by the upper limit ratio gives you the minimum amount your home should be worth: $250,000 / 52.66% = $474,744. Hence, if the market value of your home is less than $474,744, you are over-assessed. You may appeal and seek to have your bill reduced.
Hope this helps. Not a lawyer... not legal advice.
I don't see the ratios for every town in that link. It's just a one page document.
See the edit above with the revised link. (We posted at the same time.)
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No, your property taxes will not be reduced, because...
,) but I'll explain as best as I can: 
The town may appeal and seek to charge you more. 
You may appeal and seek to have your bill reduced. 
