Who has the Lowest Property Taxes? Hawaii. Ready to pack those bags and move? Or not!
Whether you’re planning to stay put, sell or buy a home, it may be a good idea to take a look at the property taxes to make sure they are in line with the property’s current “equalized” value. I’ll get to the calculations at the end of this enlightening story.
Here’s a story from my perspective about a home that took almost five years to sell. A stunning 6 bedroom, 8 bathroom home on a beautiful 2-plus acre property with exquisite amenities was originally listed over $1.8 million and had over $40,000 in annual taxes! Ouch! A successful tax appeal lowered the taxes about $5000 per year and with that, the asking price came down significantly. Unfortunately, it took another four years and many more price reductions to finally close on the home. Since it closed at a much lower price than the last tax appeal, I wouldn’t be surprised if the taxes get appealed again based on the sold price.
As you can see from this anecdote, if there is an imbalance of property taxes in relation to the asking price, it could directly affect your sale and/or a buyer’s purchasing power. It’s worth reviewing your property taxes to ensure that they are balanced.
There are a few things you can do to check what the town thinks your house is worth:
- Read below and calculate the “equalized” value yourself.
- Go to this website and enter your lot, block and total assessment, http://njtaxappeal.net/feasibility-calculator.html
- Contact an attorney who does tax appeals.
- Contact me to help review it and/or help by providing provable market comparables.
How to calculate the town’s “equalized” value, or what the town thinks your house is worth:
- Let’s use this example: an average home in Westfield was assessed at $180,300. Applying the Director’s 2016 Ratio of 24.62%, the equalized value of the average assessed home is $732,331. [Calculation: $180,300/.2462 = $732,331]
- Using the same assessed value of $180,300 and applying the Scotch Plains Director’s 2016 Ratio of 24.71%, the equalized value of the example assessed home would be $729,664. [Calculation: $180,300/.2471=$729,664]
- Now let’s calculate Fanwood using the same assessed value of $180,300 and applying the Fanwood Director’s 2016 Ratio of 19.97%. The equalized value of the example assessed home would be $902,854. [Calculation: $180,300/.1997 = $902,854]
To determine if a tax appeal may be applicable:
The simple calculation is taking the total assessed value (found on the tax records) and dividing it by the town’s current ratio. In the State of New Jersey, the County Tax Board has a 15% margin of error. So, using Westfield’s example of equalized value of $732,331, to win a Tax Appeal for 2016, the maximum provable market value (a Realtor can help provide comparables) for this property, as of October 1, 2015, cannot exceed: $622,481. These calculations should help you determine whether it is worth the effort to pursue a formal tax appeal for the 2016 tax year. [Calculation: $180,300/.2462 = $732,331-15% = $622,481]
Tax appeals, if warranted, are due by April 3, 2017. Forms, instructions and “A Guide to Tax Appeal Hearings” may be obtained at http://www.state.nj.us/treasury/taxation/pdf/other_forms/lpt/petappl.pdf
Although I’m not an attorney, I’m happy to review your real estate property taxes and suggest some options whether you’re planning to stay put or sell your home. If you or someone you know needs to buy a home, don’t be afraid to consider a home where the taxes are obviously imbalanced as long as the property is a good candidate for a tax appeal.
For Real Estate assistance in Union County, Middlesex County and Somerset County on buying, selling, investing, renting or becoming a Realtor, contact Jeni DiVirgilio on 908-477-4907, email Jeni@WelcomeHome123.com or visit www.WelcomeHome123.com.