Understanding The Assessment System and Appeals

On Monday January 5, 2004 TUF rang in the New Year with a visit with the Township Tax Assessor. And some say we at TUF don't know how to party. In all seriousness we spent an hour and a half with Mr. Burnham Hobbs, the Township Tax Assessor. The purpose of our visit was to learn more about tax assessment, how the assessor's office works and the tax appeal process. This is a fact only article, the nuts and bolts of the system, no opinions or hard questions. Almost everything in this article is based on our conversation with Mr. Hobbs. This is not investigative reporting. If you are reading this to see us rip into the system then you'll be disappointed.

Our purpose is to shed some light on an area of the tax system that most taxpayers know little or nothing about, and about which rumors abound. Do not expect to be a certified Tax Assessor when you are done reading this. It is an inherently complicated system if for no other reason because it serves four taxing entities (the Franklin Township Board of Education, the Franklin Township municipal government, Somerset County and your local fire district, and there are four different fire districts in Franklin).

ASSESSMENT PROCESS

What determines the assessment value of your house?
The short answer is "market value". The system's goal is to reasonably estimate the fair market value of your house. If the assessed value of your house is about what you would get for it if your house were sold then the tax assessor's office has done it job.

How does a house get its assessed value?
A new house gets onto the books when it is sold or when the certificate of occupancy is issued. It is then assessed by factors that include, location, floor area, finished basement, number of bedrooms, number of bathrooms, deck, pool, etc. that sets the initial value. It is then registered as part of a "neighborhood". A neighborhood is largely geographical but for instance a housing development with three different models in it may have three neighborhoods. For this reason the house next door to yours may not be in your neighborhood while the house four houses away is. Once your house is in a neighborhood the value of your house rises and falls (yes if the market value goes down your assessment will go down) with the value of the other houses in your neighborhood. There are 20,761 properties distributed in 300+ neighborhoods in Franklin Township. The size of neighborhoods varies, but 25-50 is a reasonable average.

The house down the street just sold for a lot more than it sold for 3 years ago. Will my assessment go up?
The sale of a single house will not effect your assessment. It takes several houses to sell in your neighborhood to do that. The history of a house has no effect on the formula. Current market value is the standard that calibrates the entire system.

Will getting a permit for an addition on my house affect my assessed value?
Yes. The permit application alerts the Tax Assessor that you are making changes. However, not getting that permit may not be the best plan. Several agencies look at houses and building without a permit can mean a fine. The value you put on the permit does NOT affect the assessment. The assessor uses specifics about the construction as outlined in the NJ Appraisal Manual to assess the value. If you are planning construction the assessor's office will help you estimate how the improvement will change your assessment rate.

When will that cause my taxes to go up?
Assessments are as of October 1st of each year. So your 2004 assessment is based on the value of your house on October 1st, 2003.

Do home improvements increase the value of my house?
Yes - but you can get a tax abatement on the first $25,000 of the improvements for five years if your house is 20 years old or older. This is an incentive for homeowners to upgrade their houses and minimize their taxes. So if you make a $30,000 improvement to your 20-year-old home and if you apply to the assessor's office, for the next five years the improvement will increase the value of your home by $5,000 not $30,000. The assessor's office will mail you an application when it receives the final paperwork from the construction code department. Or the home owner can pick up a form at the assessor's office

Do all home improvements increase the value of my home?
No. The following improvements are considered "repairs" and do not increase the assessed value of your home; roof replacement, windows, siding, fences, driveways and brick and sand or stone and sand patios.

Does the assessor's office use "comps" (comparable houses)?
Yes. Neighborhoods are based on comparable houses. In addition, if no houses in your neighborhood are sold then your assessment may change because of sales of houses in comparable neighborhoods.

When I buy my house does that price determine the assessment value?
Not really. No more than if another similar house in the neighborhood is sold.

Does the assessor actually come and assess houses?
Yes. They attempt to visit every house every five years.

Do you have to let them in?
No. Once you take possession of your home you are not required to allow them in, however it will most likely work in your favor to work with the assessor so they have the facts. If they don't know what you have, they have to assume what you have.

What level of government gives the tax assessor office its authority?
The State of New Jersey, with supervision from the county. The Township has no direct authority over the assessment process.

Are there special measures for assessing the Tax Assessor's house?
No. The assessor's home is part of a neighborhood, just like everyone else's. If the market value in his neighborhood goes up, so does his.

What is the 104% assessment rule?
There is no such thing.

Are there legal ways to decrease your tax?

• Additional tax due to home improvements can be delayed (up to a value of $25,000) for five years if your house is 20 years old or older.
• Senior citizen
• Veterans (must have been in at specific times)
• Veterans disabled during military service pay no property tax.
• Declaring you property as farm land (there are many restrictions to qualifying)

Are there special circumstances that will change the assessment of your home?

• A storm took down several trees on my property.
This will not change the assessment but may be helpful in an appeal.
• They just built a manufacturing plant next to my house or the zoning was changed.
This will not affect your assessment until it affects the actual selling price of homes in your neighborhood.
• My house burned down.
If this happens after the "books" are closed on or about Jan 10th then there can be no change from the assessor's office. If you do not plan to rebuild for some time you may have grounds for appeal. Barring that if it's after Jan 10 then it will not affect you taxes until next year. It's all based on what the value of your home was on October 1st. There is some leeway until Jan 10th but then it's out of the assessor's hands.
• I took down my porch.
same as above.

Does the assesses value of my house limit its sales price?
No. The price you negotiate with the buyer is not limited in any way by the assessment value. If however you are asking for more money than the assessed value the buyer may use that information to argue in their favor. You can counter that that is an approximation meant only for tax purposes.

What is the appeal process?
To appeal you must wait for the assessment notification that is sent to you on a green post card on or about Feb 1st of every year. As soon as you receive the card read it carefully to ensure you agree with the assessed value of your home. If you believe that the assessment value does not agree with the resale value of your home then you can appeal. You must appeal prior to April 1st. To start the appeal process call the Somerset County Bureau of Taxation at 908-231-7128. There are about 110 appeals in Franklin Township every year.

What are reasons for appeal that are NOT successful?

• Stating that your taxes are too high.
The method is blind to the amount of your tax bill or your ability to pay. It is based solely on a method that best tries to estimate the resale value of your home.
• Your neighbor's taxes are lower or your neighbor's assessment is lower.
Sorry this is not admissible. Again your assessment is based solely on a method that best tries to estimate the resale value of your home.

What are the grounds of a successful appeal?

• Presenting credible evidence that the market value of you home was judged inaccurately. This can be done by comparing your home to similar homes in your neighborhood that have sold recently. Only closed sales are admissible.
• You may be able to argue that your home does not belong to the neighborhood to which it is assigned.
• You may be able to show that the assessor was unaware of a factor that changed the value of your home (i.e. you had a luxurious finished basement that got flooded so you had to rip out the walls, carpeting and wet bar. This lowers the value of your property and may lower your assessment.)

What documentation will help with your appeal?
Comparison of other homes that are similar to yours. The records on every home sale are available at the assessor's office. They will help you and show you where to look for the details. Include the sq. ft. of the house, lot size, number of bedrooms, date sold, etc.

Does a private appraisal help?
If a property owner is relying upon an appraisal without the appraiser present the township lawyer will object since he is unable to question the appraiser. Having the appraiser there would help but of course that will cost you.

Do you need an attorney?
No, unless the property is owned by a corporation.

What does it cost to appeal?
This depends on the assessed value of the home

What can I do if my appeal fails?
You have the right to file an appeal to the Tax Court of NJ. This happens very infrequently. As a residential property owner you can file the appeal without an attorney in the Small Claims Division of the Tax Court. You may also want to speak to an attorney.

Additional fact. Don't forget, your local property tax is deducible from your federal income tax.

The assessor's office is there to assess your home, but they are also there to answer your questions. Feel free to ask them. Their office hours are from 8:00 a.m. to 4:30 p.m. Monday through Friday, except legal holidays. The assessor's office is located in the Franklin Township Municipal building at 475 DeMott Lane in Franklin Township.

You can contact them via phone at 732-873-2500, extension 320.

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