Reassessment - Property tax

We received my new assessment in the mail last week and we were shocked that it was 40% more than the previous year. We moved to Maplewood last March and have not done any work requiring a permit nor had the previous owners in the last few years. A 40% hike seems outrageous to me. Are others receiving similar notifications? Will the effective property tax rate go down with these new assessments? Any info is appreciated.

40%??  That sounds off.

ctrzaska said:

40%??  That sounds off.

Thanks for responding. The taxes aren't 40% more that I know of, but the assessment is. On the back of the new assessment card it says not to use last years tax rate, but they also don't state what the new tax rate will be. This obviously doesn't help when deciding to appeal or not.

The rate isn't set until the budget is, and you've got some time on that still.  That the assessment is up that much is odd...I'd grab two things: the relevant property cards from Town Hall and a pile of comps from your neighborhood over the last year.

Are property tax increases in NJ capped, specifically Maplewood? I've read some differing info online. Anyone have any insight?

individual property tax increases are not capped.  (i.e. the 2% township cap doesn't mean your individual residential property taxes won't go up more than 2% in any given year).

Is the assessed value close to the market value?  

In any case, if you are going to appeal, there are deadlines you must follow - so check with the tax assessor and find out.  

I'm not aware of caps on individual increases (but don't take my word for it), however if you're looking at property tax increases on The Google I'm sure a lot of what you're seeing are references to the 2% cap at the muni level, which is a whole other ball of wax than the homeowner level, obviously.

SINYC said:

We received my new assessment in the mail last week and we were shocked that it was 40% more than the previous year. We moved to Maplewood last March and have not done any work requiring a permit nor had the previous owners in the last few years. A 40% hike seems outrageous to me. Are others receiving similar notifications? Will the effective property tax rate go down with these new assessments? Any info is appreciated.

I assume that you're referring to the green postcard that you received in the mail from the Maplewood tax assessor. That card shows the property taxes billed in 2015, the 2015 assessment and the 2016 assessment. Are you saying that the 2016 assessment is 40% higher than the 2015 assessment? If so, that seems impossible,  in which case you should call the tax assessor. There is no "spot" assessing in NJ.

the 2% cap applies to the amount in total raised in taxes by the village.  However there are several key exceptions but overall I think the towns pretty much keep under the 2% increase.  

Any individual home can go up a lot more but a reassessment is tax neutral to the town so if yours goes up, someone else went down.  

NJ property taxes are a nightmare.  

for instance, mine went up about 3.5% last year just because.  the assessment didn't warrant appealing so c'est la vie.  assessment flat this year but sure taxes won't be.  

It doesn't matter what your assessment is.  It matters what your assessment is in relation to everyone else.  If everyone's assessed value goes up 40% then your taxes are the same.

The new tax rate will depend on the budget cycle.  The first 2 quarters of the year are estimated and then the 3rd and 4th quarter will be adjusted to make up for any excess or shortfall.

SINYC said:

ctrzaska said:

40%??  That sounds off.

Thanks for responding. The taxes aren't 40% more that I know of, but the assessment is. On the back of the new assessment card it says not to use last years tax rate, but they also don't state what the new tax rate will be. This obviously doesn't help when deciding to appeal or not.

SINNYC asked:  Are property tax increases in NJ capped, specifically Maplewood? I've read some differing info online. Anyone have any insight?

Robert_Casotto said:

individual property tax increases are not capped.  (i.e. the 2% township cap doesn't mean your individual residential property taxes won't go up more than 2% in any given year).

To clarify Robert's answer,  The increases for BUDGETS for both the municipal and schools are capped at 2% increases, with certain line item expenses excluded.  Thus, the average individual property tax may go up slightly more than 2% in any given year.

Check with the Tax Assessor to find out more that might relate specifically to your property.  

(Both Maplewood and South Orange will be having a reassessment of all of the properties this year. Most likely the sale price of recently sold homes sold will be one what are called COMPS. )

maplewood did not have a reassessment for 2016 so it shouldn't be any different than for 2015...the revaluation is for next year 2017

our first year in maplewood (2013) our taxes went up almost 12%.  It was a great welcome. And we have to pay for trash pickup.

Reassessment and revaluation are two different things.  Maplewood just did a town-wide reassessment.  The revaluation is scheduled for the following year.  

To try to answer the OP's question and build on some of the above responses:  

The municipal budget is capped at 2% increase per year.  However, the items included under the cap are those subject to inflation.  Many of the largest ticket items do not fall under this category and as such are excluded from the cap. Therefore, it is possible for the municipal portion of the real property tax bill to go up by more than 2% even with the cap in place.

The real property tax bill presently funds the school district, municipal, and county expenditures.  Of these, the school district portion is by the far the largest.  Current dependence on real property taxes to fund our school district is what drives our real property taxes so high.

The reassessment figure you were given is meaningless unless compared with the reassessment figures of every other property in town.  If real property values in general went up over the past year, your property's value for tax purposes likely went up as well.  You would need to see the comps (recent sales prices) for similar properties to yours in your assessment area to determine how that increase in value compares with the increase you are seeing in your own reassessment.

The town will set a budget, as will the county and the school district.  This is the amount of money they will need to raise through taxes, bonding, and other revenue sources to operate for the coming year.  The property tax rate for the year will then be set to enable the town to function.  Multiplying your assessed value by the tax rate will then give you the municipal taxes you will have to pay during the coming year.  School district and county taxes are a little more difficult to compute because they represent your portion of the town's portion of this obligation.

We received a similar card, where our home was reassessed for 6% more.  We bought last February.  Does this translate directly into a 6% tax increase for 2016?

No.  Please read my above post.

JustinTime said:

We received a similar card, where our home was reassessed for 6% more.  We bought last February.  Does this translate directly into a 6% tax increase for 2016?

No.  Read Joan's ...eta Great minds...

The property tax rate for the year will then be set to enable the town to function.  Multiplying your assessed value by the tax rate will then give you the municipal taxes you will have to pay during the coming year.

Ok, so:

(My Assessed Value) X (Tax Rate) = My Property Taxes

My assessed value is, then, part of the equation.  Since my assessed value increased it's safe to say my taxes should increase as well, UNLESS the tax rate developed by the town happens to decrease in comparison to 2015.  Am I viewing this correctly?

To conclude - we won't know anything for sure until the town sets the tax rate.  Then, I'm sure there will be separate notification.

Not exactly--yes, you're correct that you need to wait for the rate, but you also need everyone else's % of assessment increase.  Read Joan's post again.

As an extreme example for illustrative purposes, if your assessment goes up 6% and the rest of the town increases 10% (the unknown as of now), your taxes will inevitably decrease as a lower town-wide rate will be established to offset the aggregate assessment gains, as any net town-wide increase in overall taxes will be borne by all other homeowners who saw a larger jump.  It's not all allocated on the positive side in a zero-sum allocation.

Said another way, if you went up 6% and everyone else also went up 6%, everyone will share the cost of the town's tax increase (or decrease) equally.  So in this case, if the town raises taxes 2%, the rate would be set only incrementally higher to capture onlg the needed 2%.  And even with a 6% increase in your assessment, your taxes would only go up that 2% with everyone else.

You cannot look at the process in a vacuum--the entire town's base has to be considered.

JustinTime said:

We received a similar card, where our home was reassessed for 6% more.  We bought last February.  Does this translate directly into a 6% tax increase for 2016?

no

ctrzaska said:

Not exactly--yes, you're correct that you need to wait for the rate, but you also need everyone else's % of assessment increase.  Read Joan's post again.

As an extreme example for illustrative purposes, if your assessment goes up 6% and the rest of the town increases 10% (the unknown as of now), your taxes will inevitably decrease as a lower town-wide rate will be established to offset the aggregate assessment gains, as any net town-wide increase in overall taxes will be borne by all other homeowners who saw a larger jump.  It's not all allocated on the positive side in a zero-sum allocation.

Said another way, if you went up 6% and everyone else also went up 6%, everyone will share the cost of the town's tax increase (or decrease) equally.  So in this case, if the town raises taxes 2%, the rate would be set only incrementally higher to capture onlg the needed 2%.  And even with a 6% increase in your assessment, your taxes would only go up that 2% with everyone else.

You cannot look at the process in a vacuum--the entire town's base has to be considered.

Thank you for this.  An example really helps illustrate the process.  

It might be easier to see your annual home assessments in the online tax records file. You can search for your house here:

http://tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?menu=index&ms_user=monm&passwd=data&district=1301&mode=11

JustinTime said:

The property tax rate for the year will then be set to enable the town to function.  Multiplying your assessed value by the tax rate will then give you the municipal taxes you will have to pay during the coming year.

Ok, so:

(My Assessed Value) X (Tax Rate) = My Property Taxes

My assessed value is, then, part of the equation.  Since my assessed value increased it's safe to say my taxes should increase as well, UNLESS the tax rate developed by the town happens to decrease in comparison to 2015.  Am I viewing this correctly?

To conclude - we won't know anything for sure until the town sets the tax rate.  Then, I'm sure there will be separate notification.

There was no townwide reassessment. The townside reassessment will be effective for 2017.  Did you do any work on your house which required a permit? That is the only way that your assessment could have (or should have)  increased. 

eta - If in fact there was a legitimate reason for your assessment to go up, then yes, your taxes will go up for 2016, due to the fact that other taxpayers did not have any additional assressments. Although the 2016 tax rate has not been established, you can calculate how much the increased assessment would have cost you in additional taxes if your 2016 assessment had been effective in 2015. Just take your 2016 assessment X the 2015 tax rate. This establishes how much additional taxes your increased assessment cost you. 

No permit work done to the home.  I was assuming that this 6% increase was reflective of the sale price.  We bought in Feb. 2015.

JustinTime said:

No permit work done to the home.  I was assuming that this 6% increase was reflective of the sale price.  We bought in Feb. 2015.

My Maplewood home's assessed value hasn't changed in several years and I suspect that is not the case with the market value.

JustinTime said:

No permit work done to the home.  I was assuming that this 6% increase was reflective of the sale price.  We bought in Feb. 2015.

This is not allowed under NJ law (it's called spot assessing.)  Call the tax assessor.

Is it possible the previous owners did work and closed the permits in 2015?

max_weisenfeld said:

Is it possible the previous owners did work and closed the permits in 2015?

Very likely.