This post is from 2023 and so some details are dated / relevant to last year. I will be writing more about tax appeals in 2024.
In my previous post I touched upon “implied” market value. In this post I want to touch upon NJ’s “Chapter 123” law which I last wrote about in 2021, but am revisiting again with an interactive teaching visualization in Tableau. Chapter 123 Law is not terribly complicated once you’ve gathered the requisite data, which is a combination of personal and public data. If you can grasp Chapter 123, you can self-advocate for your property tax appeal.
Chapter 123 law is referenced in a few places, including:
- within Line #9 of the “Form A1-Petition of Appeal,”
- within guidance here published by the state, and
- in this helpful overview that I found on East Hanover Township’s website (just one of many local county tax boards trying to explain the logic). The document states:
The simple goal of the “Chapter 123 property assessment test” is to verify that the relationship between your total assessment and your true market value, as viewed as a ratio or percentage, is within an acceptable range of the Common Level for your municipality. If it is not, then the current assessment is viewed as either too high or too low and will be adjusted accordingly. The Chapter 123 test relies upon the accuracy of the estimated true market value established for the property under review. Accordingly, true market value estimates should be realistic and derived from recent sales of comparable properties. Within the appeal setting, the determination of the true market value is the primary goal of the hearing officer. Chapter 123 is not used in the year of Revaluation or Reassessment. In the year of a revaluation or reassessment there is no “range of permissible values” because the total assessed value must equal the true market value. – East Hanover Township’s “Understanding Tax Appeals“
The “Common Level for your municipality” as referenced above is a +15% and -15% margin around your municipality’s equalization ratio. So we can (for teaching/learning purposes) boil Chapter 123 down to three steps:
- Obtain your municipality’s equalization ratio. This is public data.
- Compute your property-specific assessment-sales ratio. This is homeowner-specific.
- Apply the 15% rules of Chapter 123. I showed a few examples above of where these rules are explained.
The Tableau visualization below steps a reader through these three steps, with an attempt to visualize the rules of Chapter 123:
- The equalization ratios that were certified on Oct 1, 2022 and will be used in 2023 property tax appeals, is pre-loaded (from public data here) and represented by the blue circle.
- The person icon is the property-specific ratio based on user inputs for assessed and estimated market value.
- The Common Level Range is the blue band around the circle and simply represents a +/- 15% band around the equalization ratio; if the person icon falls to the right of the band, the property’s assessment is above the common level range.
You can see as a starting example the sample home from my previous post (assessed value of $427,000, market value of $430,000) but you can input your own assumed facts to see how the evaluation changes. The most time intensive part of this process will probably be substantiating your market value, which is outside the scope of this post and something you can refer to in the appeals form (line #10).
Also – state guidance around Chapter 123 notes that under-assessed properties can be corrected upwards if the assessment is too low. So be sure you are clear on the math and assumptions (e.g. your actual true market value) as you engage this process. Consult with a professional if you are unclear or want that extra support.
Be sure to refer to the appeals form for all official guidance.
Public data and resources:
- Certification of Average Ratios and Common Level Ranges for 2023
- Table of Equalized Valuations certified Oct 1, 2022 (as amended by tax court appeals)
- Appeal My Property’s Assessment – basic overview from the NJ Division of Taxation
- Petition of Appeal form
- Handbook for New Jersey Assessors (Chapter Eight and Eleven)
- New Jersey Handbook for County Boards of Taxation (Chapter Eleven)
- A Guide to Tax Appeal Hearings
- How Property is Valued for Tax Purposes
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