PMBB can help you determine whether an appeal of the assessment of your property's value is worthwhile. The term "tax appeal" is misleading. The property owner does not appeal "taxes." Rather, the assessment of the property's value is appealed. The owner has the burden to prove that the assessment of value is too high.
 
The Process: The filing deadline is April 1, 2010 or 45 days after the municipality sends assessment notices, whichever is later.

One of two standards will apply to an appeal:

"True Market Value" Standard:  This standard applies if the property is located in a municipality that has revalued all properties for 2010.  If this standard applies, the property must be assessed at no more than 100% of its true value as of October 1, 2009. True value is determined by: (1) comparable sales; (2) capitalization of income; or (3) replacement cost. Generally, an appraisal from a qualified real estate expert will be needed.  

"Common Level Range" Standard:  This standard applies if the property is located in a municipality that has not completed a revaluation for 2010. There are two steps to evaluate whether an appeal is feasible under this standard. The first step is to determine the true value of the property.  Again, this will require an expert evaluation. The second step is to determine whether the ratio of the assessed value to the true value exceeds the upper limit of the "Common Level Range," in which case the appeal is feasible.  The "Common Level Range" computation results from the fact that a municipality is given 15% latitude in fixing its assessments after applying the "Director's Ratio" as determined by the State's Division of Taxation. The Director's Ratio is calculated by comparing the purchase price of properties within the municipality with their assessments.

Example 1:  In this example, a reduction is achieved even though the true value of the property is in excess of the assessment:

    * True Value = $900,000.

   * Assessment = $875,000.

   * Director's Ratio = 84.28%.

   * Common Level Range = 71.64%-96.92 (this is 15% less and more than 84.28%).

   * Ratio of the Assessed Value to True Value = 97.22% ($875,000/$900,000).

   * Assessment reduced because ratio of the Assessed Value to True Value exceeds Common Level Range.

    * New Assessment = $758,520 (84.28% of $900,000).


Example 2:  Assume the same facts as above except the true value of the property is $950,000.
 
    * True Value = $950,000.

   * Ratio of the Assessed Value to True Value = 92.11% ($875,000/$950,000).

   * No change to assessment because ratio of the Assessed Value to True Value falls within the Common Level Range.

 
Any tax appeal brings with it the possibility of a cross-appeal by the municipality seeking to increase the assessment of the property's value.  If the ratio of the assessed value to true value falls below the Common Level Range, the Tax Board will increase the assessment.


Example 3:  Assume the same facts as above, except the true value of the property is $1,250,000.

    * Ratio of the Assessed Value to True Value = 70% ($875,000/$1,250,000).

   * Assessment is increased because ratio of the Assessed Value to True Value is lower than the Common Level Range.

   * New Assessment = $1,053,500 (84.28% of $1,053,500).
 

Note - Chapter 91 Requests.  For "income" producing properties, the tax assessor customarily sends the property owner a "Chapter 91" request, which solicits income and expense information. If the owner received a Chapter 91 request but did not timely respond, the municipality can move to dismiss an appeal.