Property Tax Appeals in New Jersey – Increased Volume Meets Resistance

by: Anthony F. Della Pelle
25 Mar 2012

An article by Dave Sheingold in today’s Record highlights a trend regarding real estate tax appeals in New Jersey which we have seen develop in recent years, as the real estate market continues to be in flux and droves of property owners have tried to reduce expenses by filing property tax appeals.  The message from the towns is simple — don’t expect the road a reduced property tax assessment to be a simple or short one.

As Sheingold’s article mentions, New Jersey towns and municipal tax assessors are resisting the increasing volume of tax appeals by declaring more and more sales of property at “rock bottom” prices as being “non-usable”  sales which cannot be considered as comparable sales evidence in prosecuting a tax appeal.  In other words, even if your neighbor’s home sold for a low price, don’t expect that you will be able to easily rely upon that sale as a comparable sale in pursuing a tax appeal to lower your assessment, and beware of conditions which may cause the municipal authorities to claim that the sale does not represent an “arm’s length” transaction under normal market conditions.

It’s not surprising to see increased resistance, as New Jersey municipalities are witnessing unprecedented volumes of tax appeals filed in the past few years.  As a result, there are reported to be more than 50,000 pending tax appeal cases in the New Jersey Tax Court, a special court which administers property tax matters along with the various County Boards of Taxation around New Jersey.

Historically, sales of properties which are indicative of unusual conditions making them “non-usable” include sales through foreclosure, sales between family members or in connection with divorces, or sales from estates or other types of liquidation sales.  In recent years, the “short sale” market has picked up and some towns are reporting that 20% or more of their reported sale transactions are short sales, making it more likely that the town will object to a taxpayer’s reliance upon those types of transactions as comparable sales evidence in a tax appeal case.

This trend illustrates why property owners should be careful about filing tax appeals without the assistance of an attorney who is experienced in handling real estate tax appeals.  Experienced property tax counsel can guide the property owner through the process by helping his or her clients understand that not all sales transactions will be allowed as evidence, by selecting the best and most reliable evidence, and that it is important to understand that, like many other things in life, everything is not as easy as it seems.

New Jersey property owners should be mindful that the deadline for filing property tax appeals in 2012 is next Monday, April 2, 2012, except in certain municipalities where a town-wide revaluation has taken place, in which event a later deadline may apply.  So while it’s not too late, we are now in the eleventh hour!