Property taxes

I live in NJ and today I learned what I need to do to appeal my property taxes.

First I need to figure out the fair market value of your home based on neighborhood sales. You
must have 3 sales of comparable homes of similar style, size, and condition to base this value on.

The sales must have been done the last October to October.  And the big AND in the room is the sales may NOT be foreclosures, short sales, estate sales, divorce sales, relocation sales, basically anything that forced the price to be below market value or that were made under duress.  Of course in today's economy these 'comps' are not always an easy thing to find.

Second you need to determine if you property is under or over assessed.  There is a list of each town's average tax ratio published by the state, so you need to find the ratio for your town:

• http://www.state.nj.us/treasury/taxation/lpt/lptvalue.shtml

So you find your town in the list and then find the Average Ratio Assessed to True Value.  Let's say it's 80%.  Now the fun part, there is a margin of error you must apply here of +/-15%, which basically gives you a 30% gap to play with.  So that means we have 68%, 80% and 92% to play with in our example.

So you take what your current assessment is and you apply each of these percentages to it.  Let's assume your house and property are currently assessed at $100,000 for taxes.

• +15% Average Market Value = $100,000/.92 = $108,695.65
• Average Market Value = $100,000/.80 = $125,000
• -15% Average market Value = $100,000/.68 = $147,058.82

This is what the town believes (based on math) what your house is really worth, within a +/-15% range that is.  In our example above, $125.000.

If comparable homes in your neighborhood (those three you found at the beginning) are selling for less than the +15% Average Market Value amount, then you should probably consider filing an appeal of your assessment.  So in our example, if based on the local 'comps' you come up with your home value is really $102,000 you should probably file the appeal.  With a the lack of recent sales data, because houses are not selling, your data might just not be good enough.

Does this mean you will get it your taxes reduced?  Nope, from what I read, most appeals are denied.  Could be the 3 examples of sales you provided were not valid or good enough.  Could be any number of reasons, because remember, your town doesn't want to loose this revenue.  Remember the burden of proof in all of this is on you, the taxpayer.

I'm not providing you advice, just explaining what I think I learned today, I might learn more tomorrow which changes some of the above, so please go learn for yourself.