While it is a tax assessors job to review all of their sales and weed out exclusions that do not reflect market value, this high rate of exclusions does not reflect reality. There is an undeniable downward trend in the real estate market—even homeowners that are not in threat of immediate foreclosure find themselves in financial duress.
To put things into perspective take a look at the massive increase in tax appeals:
- In 2005 5,400 tax appeals were filed.
- In 2012 18,000 tax appeals were filed.
- By Aprils 2, 2013 close to 14,000 have been filed.
Many municipalities throughout New Jersey are making tax relief more difficult to come by, by restricting the pool of comparable sales that can be used as citation to homeowner’s property assessments.
New Jersey property taxes are some of the highest nationwide, and by winning an appeal homeowners can receive some much needed financial relief. What is important to keep in mind though, is that each time a homeowner wins an appeal, the town must make up the tax loss elsewhere—usually via other taxing methods.
What About Short Sales?
A typical property sale falls into category 34 codes that are mandated by the state of New Jersey. When a property is sold in relation to bankruptcy, foreclosure, and estate liquidations they are often excluded from factors that are used to calculate the current market and are instead coded as category 26. Category 26 is a catch all for all sales in which banks accept less than the value of the remaining mortgage, in exchange for avoiding a foreclosure.
Tax assessors are also allowed to use their discretion to exclude any other sales that are due to financial duress that affects the pricing. Assessors are required to research the details of the sale prior to determining if it is an “accurate” reflection of the current market. However, homeowners, appraisers, legal counsel, and even some individuals from the state monitoring board feel that some tax assessors are improperly excluding homes. Some common trends for improper exclusions are homes sold out of divorce, retirement, or those sold privately without the assistance of New Jersey realtors.
While the current qualified exclusion methods are logical in a healthy economy, a push is being made to include all short sales in the list of appeals as they are indeed a true reflection of the current state of the market.
The resolution will not be fast and easy and will require revisions to codes and qualifications parameters that will provide tax relief, accurately reflect the current market, and reduce the number of New Jersey Tax appeals.