Tax Appelals - A Multifamily Sign of Relief

One of the most costly operating expenses for multifamily Owners is Property Taxes.  In many cases, this expenditure can account for approximately 20% - 22% of APOD (Annual Property Operating Data) and endure annual increases ranging from approximately 2% - 3%.  Depending on the municipality (566 clustered within 21 counties in New Jersey alone), spikes could reach double digits if a city/town is undergoing a revaluation of property assessment data.  No matter the scenario, one fact is constant; “property taxes are too damn high!”.  Are there alternatives for Apartment Holders to gain any relief? Yes, by way of a local Property Tax Assessment Appeal (b.k.a. Tax Appeal); the judicial process for pursuing a lower tax bill based on land and building value.  Regardless of level of ownership experience or number of units, filing should definitely be considered by all multifamily owners.  As the process is meticulous (i.e…assessment analysis formulas, ratios, equalization values, etc), seeking advice from legal counsel EXPERIENCED/SPECIALIZED in examining these type cases is highly recommended.

Here are some basics about the Appeal Process in the State of New Jersey and key dates to remember.  Keep in mind the burden of proof to obtain any tax relief (over-assessment by Tax Assessor must exceed 15% of current assessed value) solely rest with the Taypayer.

Appeal Process Highlights (New Jersey)

No Hearing – Meeting set up with local municipal Tax Assessor

Filing Fee – Up to $150.00

Average Review Period – 30 to 45 Days

Feb 1st (Prior) – Tax Assessor notification to all Taxpayers by mail regarding current assessment

Feb 1st (After) – Tax Assessor notification to all Taxpayers by mail within thirty days regarding any change to assessment

Filing Deadline - April 1st of Tax Appeal year     

In the event of a successful appeal, the realized reduction amount is reported by either the Tax Court or County Board of Taxation to the subject property’s respective municipality.  Said judgment then falls under state legislation known as the “Freeze Act”; a New Jersey statute instituted to protect Taxpayers from repeat litigation/re-appeals the following year.  In fact, the statute is binding starting the Tax Appeal year and up to two (2) years afterwards.  Now what to do with the savings!  Reinvest back into the apartment asset? Offset other expenses?  Whatever you decide, it’s a relief well-deserved.