Tax Appeal Pending

To understand why this strategy may be helpful it is critical to understand the basics of New Jersey's property tax system. In summary, property taxes are supposed to be based on the fair market value of the subject property. Accordingly, in this economic environment where the value of residential, commercial and industrial properties are declining, many properties are over assessed. A tax appeal is a way to challenge the assessment and potentially lower the annual property taxes.

Now more than ever, potential buyers are considering the complete cost of ownership. In New Jersey, a significant portion of that cost is made up of property taxes. Similarly, for income producing properties, potential purchasers are shopping for properties with the lowest expenses. When an appeal has been filed, the potential purchaser will know that the process to reduce expenses has been started. Additionally, if the seller has previous years under appeal, those back years may be used as leverage to negotiate a settlement with the municipality for future tax years.

Furthermore, the eventual sale of the property may likely serve as persuasive evidence that will help settle the tax appeal. If the appeal is filed before hand the matter may be resolved very shortly after the property is sold and the deed is recorded. For most properties, an arm's length transaction is the best evidence of the value of the property.

In summary, for a seller to successfully market a property it is imperative that they use all means to help distinguish their property. For many properties, a tax appeal may be an easy and cost efficient way to do this. The filing fee for an appeal is minimal and many attorneys will work on a contingency fee that is based on the tax savings and is not due until the matter is successfully resolved.

An attorney that specializes in property tax appeals will be able to analyze the property and determine if a tax appeal is warranted. There are strict deadlines and requirements that must be satisfied to challenge an assessment. Therefore, it is prudent to contact a professional to help determine if this valuable tool may assist the sale process.

Robert Spiotti is an attorney at Davenport and Associates, a boutique firm dedicated to the practice of real estate tax appeals. He can be reached at 973-299-9925 or emailed at RSpiotti@taxcounsel.com. The views expressed here are the author's own.