Tax Appeals – Must Provide Sufficient Evidence

by: Allan Zhang
13 Apr 2020

A recent Tax Court opinion by Judge Mala Sundar provides another example of the sufficient evidence necessary to successfully challenge a tax assessment at the Tax Court level. Here, pro se plaintiff, Leena Aggarwal (“Aggarwal”), filed a tax appeal with the Monmouth County Tax Board to reduce the $456,700 assessment on his single-family colonial. Aggarwal then appealed to the Tax Court, where he provided four sales of single-family houses as evidence that his home was over-assessed. Aggarwal’s comparable sales’ prices were $399,000, $395,000, $400,000 and $407,000. He argued if he were to sell the Subject it would likely only sell for $400,000.

A party challenging an assessment has the burden to overcome the presumption that the assessment is correct as it stands and must utilize credible, objective evidence to persuade the Tax Court what is or should be the Subject’s value. MSGW Real Estate Fund, L.L.C. v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). For residential properties, the typical method of determining value is the comparable sales analysis. While a taxpayer must provide sales of comparable properties, doing so does not guarantee a reduction in assessment. The Tax Court must be persuaded that the assessment should be reduced.

Here, Aggarwal provided four sales of properties that were close to the 2018 assessment date to rebut the presumptively correct assessment. The Court noted that two of the four sales were marked as “non-usable” (NU) and thus the use of their sales prices as credible evidence of value were in doubt. Some NU sales may still be utilized as a comparable sale, if the sale is verified after a full investigation determining the sale was arms-length. Aggarwal admitted that he did not verify these two sales and therefore, the Court deemed these sales not credible evidence of the Subject’s value.

At trial, the Township’s cross-examination of Aggarwal’s four sales persuasively showed all four sales were not truly comparable because of their location. Whereas the Subject was located on a quiet, residential neighborhood, off a local street and in a cul-de-sac, the location of each comparable was inferior to the Subject. The Court noted that adjustments between a comparable sale and the Subject could be made, but Aggarwal did not attempt to make any.

As Aggarwal did not make any adjustments and did not verify two of the four sales, the evidence provided by Aggarwal was not credible evidence for the Court to make an independent assessment of the Subject’s value. Therefore, the Court did not find Aggarwal’s presented evidence as persuasive of the Subject’s value. Accordingly, Aggarwal failed to produce sufficient evidence and the Tax Board’s judgement is affirmed.

A copy of the Tax Court’s decision of Leena Aggarwal v. Township of Eatontown can be found here.

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