2016 Property Reassessment For Dummies

There is another thread about this making my eyeballs bleed. Can someone with real knowledge about this very plainly explain what this reassessment means? Is it time to stop mowing the lawn and let the house fall apart in preparation for a horrifying inspection or much ado about very little?

Much ado about very little. Read JBennett's posts and Cramer for the details of why that is the case. It's purpose is to rebalance assessments after some market changes

mod said:
Much ado about very little. Read JBennett's posts and Cramer for the details of why that is the case. It's purpose is to rebalance assessments after some market changes

Agreed. Keep calm and carry on.

It's pretty simple. For 2015, for Maplewood, the average value of property assessments was 87.67% of the sales prices. South Orange's was 85.28. The reassessment will be based on the 2016 numbers, which will probably be lower.

Using 2015 numbers, in Maplewood, if your property assessment is less than 87.67% of the average of comparable sales in the past year, your assessment will go up more in percentage terms than properties whose assessments are greater than 87.67%. Properties whose assessments go up more in percentage terms than those whose assessments whose assessments go down more in percentage terms will see their taxes increase.

The same is true with South Orange, using 85.28. For both Maplewood and South Orange, the percentages should decrease because 2015 has been a very strong year in terms of sales prices, and the reassessment will be using 2015 sales numbers.

The purpose of the inspection is to see if any capital improvements have been made that have not been recorded on the files that the towns keep (the "property cards.")

Some taxes will go up. Some will go down. Net effect in and of itself across a given town=0.

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ctrzaska said:
Some taxes will go up. Some will go down. Net effect in and of itself across a given town=0.

This is not necessarily true since SO and Maplewood share a school system and there is also a county tax. I don't know the exact numbers for Maplewood, but in South Orange, the schools and the county make up 73% of our property taxes. Unless the result of the reassessment keeps the equalized property values the same as they are now across the two towns and the county as a whole, one town could wind up paying a bit more and one could wind up paying a bit less after the fact. It's only "zero sum" for the town portion of the property tax.

Maybe I should have been clearer. There's nothing special about this exercise for either town than there normally is for the BOE piece, only that they're doing it together and attempting to maintain a more constant, equitable share of the BOE budget as a result. Adjustments to split the pie in two due to this process happen every time it's done in either town, yes? (Willing to be corrected on that point, however.) If so... once split, each of the two pieces of that pie is distributed within each given town accordingly to a set rate, as a zero-sum allocation. And yes, one town might/will see a small increase or decrease to their overall share of the pie, which impacts the individual tax assessments, but across a given town that piece of the pie remains constant once set. No?

if you did illegal renovations you wont get caught in a reassessment.

Well, there's that I suppose.

Rob_Sandow said:

ctrzaska said:
Some taxes will go up. Some will go down. Net effect in and of itself across a given town=0.

This is not necessarily true since SO and Maplewood share a school system and there is also a county tax. I don't know the exact numbers for Maplewood, but in South Orange, the schools and the county make up 73% of our property taxes. Unless the result of the reassessment keeps the equalized property values the same as they are now across the two towns and the county as a whole, one town could wind up paying a bit more and one could wind up paying a bit less after the fact. It's only "zero sum" for the town portion of the property tax.

If anyone is curious about what Equalized Valuation is and how it is calculated, the following is a good summary.

http://www.njslom.org/tax_brochure.html

I don't think that the reassessment will affect Equalized Valuation. Equalized Valuation is recalculated annually by the county tax assessor based on a formula that compares sale prices from the previous year to the assessed values. If sales prices are on average 5% higher than assessed values the county tax assessor multiples the general assessment by 1.05 to get EV. If sales prices are on average 50% higher than assessed values the county tax assessor multiplies general assessment by 1.5.

Even if a town has just done a reassessment the county tax assessor doesn't take the town at its word. The assessor always uses the "assessment-sales" multiplier, even if the reassessment done by the town is brand-new.

For instance, Paterson did a reevaluation in 2015. The new reevaluation dropped Paterson's general assessment to ~$5.7 billion (from over $8 billion based on a 2007 reevaluation.)

The Passaic County tax assessor still did its own calculation and determined that Paterson's Equalized Valuation was $6.3 billion.

cramer said:
Using 2015 numbers, in Maplewood, if your property assessment is less than 87.67% of the average of comparable sales in the past year, your assessment will go up more in percentage terms than properties whose assessments are greater than 87.67%.

"Comparable sales" seems to be a key determinant here. So how do they determine this? What factors? Similar to comps used in typical mortgage or refinance?

xavier67 said:

cramer said:
Using 2015 numbers, in Maplewood, if your property assessment is less than 87.67% of the average of comparable sales in the past year, your assessment will go up more in percentage terms than properties whose assessments are greater than 87.67%.

"Comparable sales" seems to be a key determinant here. So how do they determine this? What factors? Similar to comps used in typical mortgage or refinance?

Yes. See "The Sales Comparison Approach."

http://www.state.nj.us/treasury/taxation/pdf/lpt/ptassessment.pdf

FYI, Jersey City, Elizabeth, and Dunellen may be forced to do reassessments by the state treasury.

http://www.nj.com/hudson/index.ssf/2015/11/nj_looking_into_whether_to_force_jersey_city_reval.html

When will the results of this assessment be finished?  I think there are some homes around here with enormous tax bills that haven't been selling, in part, because of the taxes.  Should anyone thinking of appealing their taxes hold off at this point?

Please, I hope they force Jersey City's hand. Crooks out there, they haven't done a reval since 1988.

mcgoey said:

When will the results of this assessment be finished?  I think there are some homes around here with enormous tax bills that haven't been selling, in part, because of the taxes.  Should anyone thinking of appealing their taxes hold off at this point?

The new assessments will be effective Jan. 1, 2017.  Any appeal at this point would have to made by April 1, 2016, and you would be appealing your assessment for 2016. If your appeal of your 2016 is successful, you'll still be reassessed on Jan. 1, 2017. You probably won't know the results of your appeal by the time that you're notified of your new assessment. 

A good lawyer who handles appeals of property assessments will tell you if you have a good case for appealing your assessment. They won't even take your case if it isn't a good one.

Wow.  If you want to watch five minutes of the most pure, unadulterated b______t ever from a politician (in a functioning democracy), watch Steve Fulop try to justify cancelling Jersey City's long-delayed reevaluation.

https://www.youtube.com/watch?v=UGUd534uIs4&feature=youtu.be

WOW.

I don't think Fulop understands how a revaluation works (nice scare tactics as well).  The overall tax burden does not increase or decrease because of a revaluation.  The tax burden is redistributed based on the new values.  

He seems to think the overall tax burden will increase due to the revaluation.  And that home values will plummet by hundreds of thousands of dollars.  He has no clue.

He may have a point about the contract being awarded illegally, but otherwise he is just plain wrong.

Isn't he positioning himself for a run at the Governor's office?

We received a solicitation letter from Jacobus & Associates offering to file an appeal on our behalf.  Has anyone worked with this firm?  I don't see a downside to proceeding with an appeal other than the $425 filing fee.  Am I missing something? 

Are you sure that's the only cost?  My guess is they take a percentage of whatever savings are achieved.

Yes - you are correct.   If the appeal is successful they will get 50% of the first year tax savings.  

yahooyahoo said:

Are you sure that's the only cost?  My guess is they take a percentage of whatever savings are achieved.

Wasn't terribly satisfied.  Also, make sure it is just the first year and not each year for which an appeal is pending.  These cases tend to drag (and the lawyers don't seem to push them too quickly) so that the number of years builds and they take 50% of each of those years.  In other words, if she files it for you this year and it is not resolved until 2018, she'd take 50% of the reduction from 2016, 2017, and 2018.  Just make sure.

yahooyahoo said:

I don't think Fulop understands how a revaluation works (nice scare tactics as well).  The overall tax burden does not increase or decrease because of a revaluation.  The tax burden is redistributed based on the new values.  

He seems to think the overall tax burden will increase due to the revaluation.  And that home values will plummet by hundreds of thousands of dollars.  He has no clue.

He may have a point about the contract being awarded illegally, but otherwise he is just plain wrong.

Isn't he positioning himself for a run at the Governor's office?

I'm pretty sure he knows exactly how a reval works. He just doesn't want his constituents to know.

Also, you'll likely end up paying for an appraisal, too.  Wasn't that thrilled with the guy she recommended, either.

Then what is his agenda?  Is he in the pocket of developers?

dave23 said:

I'm pretty sure he knows exactly how a reval works. He just doesn't want his constituents to know.

Also, he's probably underassessed by more than half.  Jersey City's equalization ratio is 27.63 and, based upon the purchase price of his new home, he's assessed at 12.31% of it's value.

yahooyahoo said:

Then what is his agenda?  Is he in the pocket of developers?

Aid, methinks.

Steve said:

Wasn't terribly satisfied.  Also, make sure it is just the first year and not each year for which an appeal is pending.  These cases tend to drag (and the lawyers don't seem to push them too quickly) so that the number of years builds and they take 50% of each of those years.  In other words, if she files it for you this year and it is not resolved until 2018, she'd take 50% of the reduction from 2016, 2017, and 2018.  Just make sure.

The appeal has to be for the tax year 2016. Generally, most lawyers will state in their agreement that the 30% contingency is on the tax savings for the first year (at least that has been my experience.)

In any event, even if the appeal is successful, the reassessment effective Jan. 1, 2017 will determine the assessment for 2017 and successive years (unless an appeal is made for the 2017 assessment.) 

eta - I would never use a lawyer who isn't clear that the contingent fee  applies only to the tax year for which the appeal is being made.