• 2012 Commercial Property Tax Appeals
  • March 5, 2012 | Authors: Thomas J. Denitzio; John J. Reilly
  • Law Firm: Greenbaum, Rowe, Smith & Davis LLP - Woodbridge Office
  • New Jersey’s commercial, industrial and multi-occupancy property owners are eager to see signs of an economic rebound, and many continue to face challenges to their bottom line precipitated by factors such as lower rental incomes and higher vacancy rates. Others may face property value issues resulting from the discovery of environmental contamination.

    The same issues that have a negative impact on a property’s value can lend support to the case that the property has been over-assessed for purposes of local property taxation.

    Property owners who wish to consider an appeal of their 2012 property tax assessment have a limited window of time to act.

    FAQs and Important Dates

    Notice of Assessment: Local assessors were required to notify each taxpayer by mail of their 2012 assessment on or before February 1, 2012.

    How Assessments Are Calculated: If the municipality has conducted a municipal-wide revaluation or reassessment, the assessment will be in the amount of the assessor’s estimate of the market value of the property (the so-called “true value”) as of October 1, 2011. Otherwise, the assessment will be in the amount of the assessor’s estimate of the market value of the property as of October 1, 2011, adjusted by the average ratio of the assessed value to the market value of other properties in the municipality. This average ratio is determined by the State Director of Taxation. In considering an appeal, property owners need to determine the true value of the property reflected in the assessment to ascertain whether there is a basis for a tax appeal.

    Filing an Appeal: An appeal from the 2012 assessment must be filed on or before April 1, 2012; however if the assessment is the result of a municipal-wide revaluation or reassessment, the appeal deadline is extended to May 1, 2012.

    Appeals are made to the County Board of Taxation, except in instances where the assessment exceeds $1,000,000, in which case an appeal can be made directly to the New Jersey Tax Court.

    The Appeals Process and Sample Outcomes

    The Tax Court rules mandate that parties must participate in a settlement conference, and, in fact, most tax appeals do settle. Examples of recent settlements in which the firm represented the owners of various types of properties include:

    • The assessment of a 28,000 square foot retail store was reduced by 25%, from $2,530,700 to $1,899,000.
    • The assessment of a hotel/office building was reduced by 22%, from $12,458,100 to $9,672,000.
    • The assessment of a 130,000 square foot office building was reduced by 47%, from $5,900,000 to $3,119,800.
    • The assessment of a 7,800 square foot office building was reduced by 37%, from $2,005,000 to $1,255,000.

    On occasion, the difference between the property owner’s estimate of market value and that of the town can not be reconciled. In those cases, formal appraisals are exchanged and the parties prepare for trial. The firm has garnered substantial assessment reductions and tax refunds when representing property owners in a number of recent tax court trials.