Some of New Jersey’s commercial, industrial and multi-occupancy property owners have seen signs of an economic rebound, but many continue to face challenges to their bottom line precipitated by factors such as lower rental incomes and higher vacancy rates. Others may face property value issues resulting from the existence of environmental contamination.

The same issues that have a negative impact on a property’s value lend support to a claim that the property has been over-assessed for purposes of local property taxation.

Property owners who wish to consider an appeal of their 2016 property tax assessment have a limited window of time to act.

FAQs and Important Dates

Notice of Assessment: Local assessors are required to notify each taxpayer by mail of their 2016 assessment on or before February 1, 2016.

How Assessments Are Calculated: If the municipality has conducted a municipal-wide revaluation or reassessment, the assessment will be in the amount of the assessor’s estimate of the market value of the property (the so-called “true value”) as of October 1, 2015. Otherwise, the assessment will be in the amount of the assessor’s estimate of the market value of the property as of October 1, 2015, adjusted by the average ratio of the assessed value to the market value of other properties in the municipality. This average ratio is determined by the State Director of Taxation. In considering an appeal, property owners need to determine the true value of the property reflected in the assessment to ascertain whether there is a basis for a tax appeal.

Filing an Appeal: An appeal from the 2016 assessment must be filed on or before April 1, 2016; however, if the assessment is the result of a municipal-wide revaluation or reassessment, the appeal deadline is extended to May 1, 2016.

Appeals are made to the County Board of Taxation, except in instances where the assessment exceeds $1,000,000, in which case an appeal can be made directly to the New Jersey Tax Court.

The Appeals Process and Sample Outcomes

The Tax Court rules mandate that parties must participate in a settlement conference, and, in fact, most tax appeals do settle. Examples of recent settlements in which the firm represented the owners of various types of properties include:

• The assessment of a vacant office building was reduced by 53% from $16,110,000 to $7,519,200.
• The assessment of a 130,000 square foot office building was reduced by 47%, from $5,900,000 to $3,119,800.
• The assessment of 288 condominium units was reduced by 46% from $121,395,500 to $65,464,000.
• The assessment of a 197,000 square foot industrial building was reduced by 26% from $4,400,000 to $3,227,200.
• The assessment of a hotel/office building was reduced by 22%, from $12,458,100 to $9,672,000.
• The assessment of a multi-tenanted warehouse/self storage facility with 21,000 square feet was reduced by 18% from $1,523,700 to $1,250,000.
• The assessment of a shopping center with a total area of 57,500 square feet was reduced by 14% from $6,513,400 to $5,600,000.
• The assessment of a 93-unit cooperative was reduced by 13% from $10,320,000 to $8,900,000.
• The assessment of a 240-unit garden apartment complex was reduced by 12% from $19,230,700 to $16,800,000.

On occasion, the difference between the property owner’s estimate of market value and that of the town cannot be reconciled. In those cases, formal appraisals are exchanged and the parties prepare for trial.  The firm has garnered substantial assessment reductions and tax refunds when representing property owners in a number of recent tax court trials.

Next Steps

If you are interested in exploring your individual property tax appeal circumstances and pursuing a tax appeal, Greenbaum, Rowe, Smith & Davis LLP can assist. Drawing upon our extensive experience in all aspects of real property valuation, we can undertake the initial baseline analysis and evaluation to determine the viability of pursuing an appeal on your behalf. If you decide to appeal, we will prepare, file and prosecute the appeal, while constantly seeking to obtain a reduced assessment in a cost-effective manner.

For additional information concerning the property tax appeal process in New Jersey, or to schedule a consultation, please contact the authors of this Alert Thomas J. Denitzio, Jr., Co-Chair of the Real Estate Department or John J. Reilly a partner in the Litigation Department and Chair of the Condemnation & Eminent Domain Practice Group.