Am I Paying Too Much in Property Tax?

1. Figure out your ASSESSED value
   ASSESSED Value = Your home’s value according to the GOVERNMENT.

Your assessed value is what the city thinks your property is worth for property taxation purposes. It is the basis on which your tax bill is computed each year:

Your Annual Tax Expense = Assessed Value x Tax Rate

Assessed value is part of your tax record, which is on file with the city, county, and state … and accessible online HERE.  I have a sample tax record pictured below.  Note that assessed value is the sum-total of 2 components:

1. Land Value PLUS
2. Building Value (the “building” is anything other than the land)

The city government is only allowed to update your assessed value in certain circumstances, as defined by state law. Citywide revaluation is one such circumstance.

Tax Record “Post Card” (an example):

1. Figure out your MARKET value.

Hudson County’s 2017 property tax appeal form provides detail about how to determine market value. To quickly summarize, there are both fee-based and non-fee-based options to determine your market value.  

Fee-Based

You can pay a licensed appraiser to inspect your property and estimate your market value. This consumer brief from the NJ Division of Consumer Affairs explains more about licensed appraisers.  This is arguably the most provable determination of your market value if you had to defend market value for appeal purposes.

Non-Fee-Based

You can also determine your market value for free, which may require consulting with a  realtor and/or some additional learning and advocacy on your part. 

A licensed realtor can help you understand what your home’s value is and what is driving the price point.  A key set of data the realtor will use: comparable sales (something the appraiser also typically uses).

You can also look up comparable sales, on your own, in the NJ Assessments Records database.  I downloaded Jersey City 2017 Class “2” (1-4 family) sales from this database and mapped them here to illustrate the type of information that is available in this database.  An important point to note: this is data about home sales, but it’s tracked by the state for tax purposes only…so it lacks more nuanced information your realtor might have access to, like number of bedrooms and bathrooms, garage and parking details, and qualification around recent upgrades. 

One caveat, for both realtors and residents in general to understand: to be “comparable” for property tax appeal purposes, a sale comparison must be:

• Usable.  A “usable sale” is a tax term that is part of the tax record. Generally speaking, “usable” sales are 3rd party sales where the price point is a true proxy of market value. State law defines a specific list of “non-usable sale” types which you can read about here. 
• Recent. To qualify as a recent sale for 2018 property tax appeal purposes, the sale must have occurred on or before Oct 1, 2017. 

The County Tax Board can clarify questions about usable vs. non-usable sales. Also, Appraisal Systems (the company doing Jersey City’s Revaluation) explains the use of comparable sales starting on slide 23 of their Revaluation presentation.

1. Compute this: Assessed Value – Market Value. If this answer is positive, you’re over-taxed.

Get a calculator, a piece of paper, and a pencil. Or your computer. Whatever you’re most comfortable with. And then do some basic math:

(1) Take your assessed value from the Tax Postcard.

Subtract:

(2) Your estimate of market value.

If the result is positive, then this is the amount you are “over-assessed”, based on your estimate of market value.  The term “over-assessed” effectively means “over-taxed”. Here’s why:

Your tax bill is computed by multiplying your assessed value times the tax rate. If your assessed value is too high, then your tax bill will be too high too. So — “over-assessed” is effectively the same as “over-taxed” — both connote that you are paying too much in property tax.  Both connote that your assessment is more than your market value. I’ve included an example below (next section) that lays out this concept. 

Read a simple example to understand these 3 steps.

Some Fine Print – Read this if you’re NOT from Jersey City.

This analysis presumes that assessments are true to to market. If you live in a town where assessments are outdated, such that your equalization ratio is below 85%, then you’ll have a few additional steps to undertake to figure out if you’re paying to much in property tax. This CivicParent post from 2016 explains those steps in detail. 

I think I may be over-taxed because my assessment is too high. What can I do about it?

With a citywide revaluation, there are 2 points to challenge a new assessment:

1. You can challenge the initial assessment provided by the appraisal firm. Read Appraisal Systems Inc’s overview of that process here. 
2. You can then challenge the final assessment through a formal appeals process with the county.  Contact the Hudson County Tax Board for specifics on the process for Jersey City in 2018 (I’ll also share what I learn on this site as I’m able to).

Connecting in community is a way to help you self-advocate. This is why I’m hosting three property tax workshops at my parish, St. Aedan’s: The Saint Peter’s University Church. By talking with neighbors, local real estate experts, and advocates who have an interest in property tax fairness, you can get a clearer sense of the process and what your options are.  Click here to learn more about these community connections.