With April 1 less than a month away, local governments across the state are bracing for what may be another round of tax appeals from property owners who believe their homes or businesses are worth less than their assessed value.
Property tax appeals jumped three years ago after the housing market collapsed and many homeowners saw the value of their homes slide due to the weak housing market and the recession.
Since they pay taxes based on the amount their home is assessed at, if they can get the value lowered, they pay lower property taxes.
The national trend in appeals particularly held true here in the Garden State, where residents pay the highest property taxes in the country. The trend reached to Secaucus, which experienced an increase in appeals during the recession.
The burden of proof is on the property owner, not the local municipality.
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Secaucus sees slight drop in tax revenues
“We saw an increase in tax appeals in 2008, continuing into 2009,” said Town Administrator David Drumeler last week. “It primarily affects us most with commercial properties because they tend to be bigger taxpayers, and it appears they’ve been hurt more by the recession.”
About 65 to 70 percent of Secaucus’ tax base comes from commercial property.
Drumeler said he could not estimate how many tax appeals the town had in the last two years, because cases typically aren’t decided until months after the tax year has ended.
“What I can tell you is where our ratable base is, and that’s a good indication of where our tax appeals,” Drumeler said. “In 2007, our ratable base [the total value of taxable property] was $2.54 billion. In 2008 it was $2.52 billion.”
Not all of this decrease is due to successful tax appeals, Drumeler stated. A number of other factors – including the closure of Mill Creek Mall and the movie theater for renovations – are also partly to blame. But he acknowledged that some property owners did win their appeals.
Still, Secaucus wasn’t hit as hard as some towns in New Jersey, partly because new commercial and residential properties were added to the tax rolls even as tax payments from others were reduced due to an appeal. The first phase of Xchange at Secaucus Junction, the large residential development near the Frank R. Lautenberg Rail Station, was completed in 2008. Also, Mill Creek Mall renovations have been completed and a new Kerasotes Theatre has opened, so tax income from these properties has gone back up.
“In this tough economic time, my goal is to be as flat as can be in net ratable,” he said. “We’re trying very hard. Whether we’re going to get there or not, it’s too soon to say.”
The town is bonded to cover the costs of refunds issued to taxpayers who win their appeals. In 2008, Secaucus bonded for $2.2 million to cover tax appeals. Last year the town bonded $1.89 million for tax appeals.
“We knew we had a number of large tax appeals coming and we knew we couldn’t afford to pay them out in cash,” Drumeler said.
With permission from the New Jersey Department of Community Affairs, municipalities can refund tax money to property owners over a period of a few years, rather than in one lump sum.
Like other municipalities around New Jersey, Secaucus has also experienced tax appeals from residential homeowners, some of whom have also been successful with their appeals. However, Drumeler said these appeals have had little effect on the town’s budget.
So you want a property tax refund?
To successfully win a tax appeal, the property owner must prove that their tax rate is more than 15 percent of what it should be – and the burden of proof is on the property owner, not the local municipality.
Tax courts and tax boards consider the tax assessor’s evaluation of a property to be accurate. In an appeal, the tax assessor is not required to prove the accuracy of his assessment.
“The appeal process can be enormously intimidating, especially for the average person,” said New York City-based Kevin Wylie, who won a tax appeal for a residential property he owned in California and now helps others with their appeals. “There’s a huge amount of information you have to present in order to win your appeal, and sometimes even after you have all the information you can still sometimes lose. It can be frustrating and it can cause some people not to even try.”
Some tax experts recommend hiring an independent appraiser to help gather information and evidence for an appeal.
Drumeler said he can’t gauge how many tax appeals may be filed in 2010.
“I’m cautiously optimistic that we won’t see an increase and the number of appeals will be comparable to what we saw last year,” he said.
Residential and commercial property owners who believe they’re entitled to a reduction in taxes must file their appeal by April 1.
E-mail E. Assata Wright at awright@hudsonreporter.com.