The Town of Morristown recently confirmed that it will be undertaking a municipal-wide revaluation of all properties in the Town, for the first time since a 2004 revaluation was performed. Anthony Delle Pelle, a principal in the Morris Township firm of McKirdy, Riskin, Olson & DellaPelle, P.C, explains.
By Anthony Delle Pelle
The Town of Morristown recently confirmed that it will be undertaking a municipal-wide revaluation of all properties in the Town, for the first time since a 2004 revaluation was performed.
A revaluation program involves the mass appraisal and reassessment of all real property in a taxing district and is performed by an outside professional appraisal or revaluation firm, which works with the local assessor in the municipality in implementing the new assessments that result from the revaluation.
The goal of a revaluation is to spread the tax burden fairly and equitably within the town so that everyone who owns property does not pay more than their fair share of taxes.
Since New Jersey municipalities are not required to reassess or revalue property tax assessments every year, they typically rely upon an “equalization ratio” which attempts to take into account any changes in the real estate market between the date that the tax assessment was established and the date of any future year.
For instance, if properties in a particular town were assessed at their values in 2012, but market values have increased in value by 100% in 10 years, that would mean that the equalization ratio in 2022 should be 50% because the 2012 assessment presumably represents 1/2 of the value in 2022. In other words, a property tax assessment of $100,000 in a town that has an equalization ratio of 50% in 2022 should translate into a value indication of $200,000 that year ($100,000 / 50% = $200,000).
After a revaluation, the equalization ratio for the town will be reset to 100% since the resulting assessments are intended to reflect current market values. For 2023, property tax assessments will be intended to reflect fair market value as of the “assessment date” of October 1, 2022.
Revaluations are periodically required because the ratio may not accurately measure market value changes. In addition, each town only is allowed to have one equalization ratio each year, and this does not account for the fact that different types of real estate will likely increase or decrease in market value at different rates or percentages.
As a result, the revaluation seeks to ensure that property tax assessments are accurate and current. Where revaluations have not occurred in many years, there is a greater likelihood that assessments are inaccurate, and the County Boards of Taxation have the power to order a town to perform a revaluation if they believe that one is warranted.
While some may assume that a revaluation will result in an increase in local property taxes owed, that is not necessarily true. The revaluation only modifies the property tax assessment, while property taxes owed are determined by applying the tax rate (also changed each year) to the assessed value in order to meet the municipal budget and other local budgets for schools and county government.
It is, therefore, possible that a revaluation may result in a decrease in local property taxes owed by any particular owner.
The revaluation process typically involves outreach and inspections of all properties by representatives of the revaluation company. Next, each property’s details will be inventoried and data will be obtained by performing market research on all classes of properties.
The revaluation company will then ordinarily communicate its preliminary evaluation and proposed new assessment to each property owner, to provide the owner(s) with an opportunity to review the proposed assessment and to communicate any information that the owner(s) believe may be erroneous or overlooked.
After the informal review is completed, the new assessments are set and communicated to the owners, who can formally appeal the new assessments by filing a tax appeal.
While the ordinary deadline to file a tax appeal each year in most New Jersey towns is April 1st, towns that undergo municipal revaluations will obtain an extended filing deadline for appeals, which is usually May 1st but can be later with court approval.
For next year’s revaluation in Morristown, the revaluation company retained by the town is expected to start notifying property owners of its intentions to perform inspections later this summer or in the fall.
So property owners should start getting ready! If the suggested time for inspection is not convenient for the owners and interior access cannot be provided, opportunities to reschedule should be provided. If, for instance, a single-family home had an addition put on or has undergone renovations since the last revaluation, those changes are likely to be noted by the inspector in arriving at a new assessed value.
More information about the revaluation company involved in Morristown and the work it intends to perform is available here.
While the ultimate objective of the revaluation is to end up with fair and accurate assessments for all properties, it does present some risks to taxpayers that their assessments will be unfair or inaccurate.
If you believe that your property tax assessment is not fair or accurate, it is prudent to contact an experienced tax appeal attorney who can help you navigate through the specifics of each individual case.
If you have any questions concerning your property tax assessment, contact McKirdy, Riskin, Olson & DellaPelle, P.C. to speak with an experienced attorney.
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