With real estate values falling, it may be advantageous for you to file a real estate tax appeal of your 2009 assessment. Due to an upcoming deadline of April 1, 2009, now is the time to evaluate whether an appeal is feasible. The attorneys at PMBB can help you determine whether an appeal is worthwhile to pursue.

Tax appeals must be filed by April 1, 2009 of tax year or 45 days from date of bulk mailing of Assessment Notices (i.e., the green postcards), whichever is later.

The Process: The appeal process is relatively simple. However, the analysis to determine if an appeal is feasible is complicated. The term "tax appeal" is misleading. The owner does not appeal the "taxes" but rather the assessment.  The owner has the burden of proof to prove that the assessment is too high.

Only one of two standards will apply to your appeal as follows:

"True Market Value" Standard: This standard will apply where the property is located in a municipality that has just completed a revaluation for the year 2009. For example, Galloway just completed a revaluation. If your appeal falls under this standard, your property must be assessed at no more than 100% of the True Value as of October 1, 2008, which is the annual "assessment date." True Value is determined by one of 3 methods; comparable sales, capitalization of income, or replacement cost. An appraiser can help make an initial determination of True Value.

"Common Level Range" Standard: This standard applies where the property is located in a municipality that has not just completed a revaluation for the year 2009. There are two steps to evaluate whether an appeal is feasible under this standard. The first step is to determine the True Value. This is done the same way as under the True Market Value Standard above. The second step is to determine whether the ratio of the assessed value to True Value exceeds the "Director's Ratio." The Division of Taxation annually conducts a survey to determine the Director's Ratio for each municipality. The Director's Ratio is calculated by comparing the purchase price of properties during the prior year with their assessments. For example, this year the Director's Ratio for the City of Margate is 82.5%.  This means that the average property in Margate is assessed at 82.5% of its True Value.

This standard is more difficult to overcome because the municipality does not have to be exact. The municipality has a 15% range, known as the "Common Level Range". The municipality can over assess your property and as long as it stays within the Common Level Range the assessment will be upheld. If the ratio of assessed value to True Value exceeds the Common Level Range, the assessment is reduced.

Example 1:  Assume the following example for a property located in the City of Margate (note that 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 = 82.5%.
• Common Level Range = 70.12%-94.88% (this is 15% less and more than 82.5%).
• 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 = $742,500 (82.5% of $900,000).

Example 2:  If the assessment falls within the Common Level Range, no adjustment is made to the assessment. Assume the same facts as above except the True Value is $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.

Example 3:  If the assessed value to True Value ratio falls below the common level, the Tax Board must increase the assessment. Assume the same facts as above except the True Value 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 Common Level Range.
• New Assessment = $1,031,250 (82.5% of $1,250,000).