October 1 is the time of year the fair value of property is assessed for the following year, providing essentially the “snapshot” of fair value for the 2018 property assessment. Additionally, municipal budgets for the next tax year are typically set in December, making this time of year particularly opportune for “discussing” reductions in property assessments with a tax assessor. If an acceptable reduction is not reached with the assessor, several requirements (delineated below) must be met to appeal the assessment.
The first requirement pertains to timing of the appeal. In a non-reassessment/revaluation year, the appeal must be filed no later than April 1. This deadline is dictated by statute and cannot be extended. If the property underwent a municipal-wide reassessment or revaluation, the deadline to file is May 1. Again, this date cannot be extended. If the filing deadline is not met by the property owner, the assessment cannot be appealed until the next tax year.
The second requirement is that all amounts due to the municipality through the first quarter of the current year must be paid in full. The amounts required to be paid include all property taxes and municipal charges such as water and sewer.
The final requirement pertains to income-producing property. Although not required on an annual basis, the municipality might from time to time request income and expense information from the property owner. The request must be sent by the assessor no later than forty-five days prior to October 10, though these are often mailed in the summer. The request is commonly referred to as a “Chapter 91 request”.
Certain requirements are imposed on the assessor when a Chapter 91 request is sent, but the requirements are easily fulfilled. Specifically, the Chapter 91 request must be sent by certified mail and must include a copy of the relevant statute (N.J.S.A. §54:4-34). If a Chapter 91 request is sent to a property owner, the request must be answered within forty-five days. Failure to answer the request precludes an appeal of the assessment.
Although the courts have determined that owners of non-income producing property do not need to answer a Chapter 91 request, it is advisable to have all property owners respond. See H.J. Bailey Co. v. Neptune Tp., 399 N.J. Super, 381 (App. Div. 2008). One reason for this advice is based on the fact that the property could later be found to be income-producing; if the request were not answered, the appeal would still not be allowed. Further, if the property was previously considered income-producing, the property owner must respond to the request in order to notify the assessor the property is no longer income-producing. See Thirty Mazel, LLC v. City of East Orange, Docket No. 00371-2008 (Jan. 16, 2009).
An appeal can be filed by the deadline with either the County Board of Taxation or the Tax Court, based on the assessed value of the property. If the property assessment is under $1 million, the appeal must be filed with the County Board of Taxation. Any property, whether residential or commercial, that exceeds $1 million in its assessed value can be filed directly with the Tax Court.
Whether in the Tax Court or in front of the County Board of Taxation, the presumption is that the assessed value is correct; the property owner has to overcome this presumption. For residential properties, comparable sales or an appraisal based on comparable sales is generally sufficient. For commercial properties, an appraisal should be conducted with a conclusion regarding the value based on three views: comparable sales, income and expense, and cost of replacement.
Eric A. Feldhake is a shareholder with the firm. He earned his J.D. at Temple University School of Law and earned his LL.M. in Taxation and M.B.A. from Temple University. Mr. Feldhake is also a Major in the Judge Advocate General Corps of the Army Reserve. Mr. Feldhake’s particular areas of expertise include trust and estate litigation, trust and estate administration, guardianship litigation, estate planning, real estate law, and tax law.