M id A tlantic Real Estate Journal — 2020 Forecast — January 31 - February 13, 2020 — 5C
www.marej.com
Property Tax
hi le commerc ial real estate lease transactions and By Anthony F. DellaPelle, Esq., CRE, McKirdy, Riskin, Olson & DellaPelle, P.C. Five tips for commercial property taxpayers in New Jersey W
Pending appeals, particu- larly where the property has a significant assessment and/ or where multiple years are pending, can involve hun- dreds of thousands of dollars of overpaid taxes and refund claims. The parties’ entitle- ment to any refunds should therefore be negotiated into the agreement of sale, so the seller should disclose the existence of pending appeals and even recently resolved prior appeals. In addition, since municipalities may want to “step down” tax as- sessments in settlements,
the buyer and seller’s alloca- tion of refunds or credits for overpayments will need to account for that possibility. Don’t miss the filing deadlines: For most prop- erties in New Jersey, the annual filing deadline for tax appeals is April 1st. If the municipality has undergone a municipal revaluation or reassessment, the deadline can be extended to May 1st. Some New Jersey towns re- assess nearly every year so check on the filing deadline! Buyers and tenants should make sure that they have the
right to file an appeal prior to closing. Finally, “added” as- sessments (which account for changes to properties after the prior assessment date) or “omitted” assessments (which apply to assessments which were not made due to the assessor’s error) can be levied later in the year (by October 1), and normally have a December 1 filing deadline. Anthony F. DellaPelle, Esq., CRE, is a sharehold- er in the firm of McKirdy, Riskin, Olson & Della- Pelle, P.C.
Is Chapter 91 aProblem? Any buyer or taxpayer needs to determine if “Chapter 91” requests were properly made by the local tax assessor and, if so, if timely responses were submitted. Failure to timely respond to proper Chapter 91 requests will give the town a right to dismiss any appeal filed in the following year. The seller’s disclosure of the Chapter 91 history is therefore critical. Any Pending or Prior Appeals? Commercial tax appeals in New Jersey can take a few years to resolve.
sa l e s no r - mally allo- cate respon- sibility for property tax- es, there are several key issues for the taxpayers to evaluate be- fore signing
Anthony DellaPelle
a lease or closing title. These five tips can help avoid exces- sive taxation or minimize the chances of a property tax surprise before it’s too late. Check the “Equalization Ratio” : New Jersey munici- palities use an equalization ratio to translate property tax assessment to market value, thereby avoiding the need to reassess proper- ties every year. Commonly known as the “Chapter 123” ratio, the ratio is changed every year and all town’s ra- tios are available on the New Jersey Division of Taxation’s website here: https://www. state.nj.us/treasury/taxa- tion/lpt/chapter123.shtml. For a ratio at or near 100%, the assessment is intended to represent current market value. But some municipal agencies have base assess- ments that have not been revalued in many years, so the equalization ratio is low, such as the City of Elizabeth, which has a 2020 ratio of 10.68%. As a result, a prop- erty assessed at $500,000 in Elizabeth in 2020 is in- tended to indicate a market value of about $4,700,000. This means that even small changes in the assessment will indicate significant im- pacts on value. Know the “Upper and Lower Limits” : Chapter 123 law also provides mu- nicipalities with a cushion on their property tax assess- ments, so they don’t need to be perfect. The “upper” and “lower” limits represent a shield in the amount of 15% of the equalization ration. For instance, in a town such as Monroe Township, the 2020 equalization ratio is 81.72%, so an appeal chal- lenging an assessment must prove a value outside of the upper limit of 93.98% and the lower limit of 69.46% - that’s a big cushion!
Our practice is limited to: Eminent Domain, Property Tax Appeals and Redevelopment We’ve been protecting New Jersey property owners’ rights for over 50 years
McKirdy, Riskin, Olson & DellaPelle, P.C. 201 Littleton Road, Suite 135
Morris Plains, New Jersey 07950 973.539.8900 |www.mr od.law
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