Property Tax Fluctuation Every 2 Quarters?

Question

Hello All,

As I have been trying to understand property taxes a bit more, I have been confused by the property taxes levied on the building I currently live in. Below is a screenshot of the JC online tax payment system. I was under the impression that Hudson county sets tax rates once annually after municipality budget review. This is why I am confused by the billed property taxes changing every two quarters. I appreciate your insight!

Justin K. · Answer

What Chris said is correct in my county.  The weird thing in one of the counties I invest in is that the Taxes run Jan 1 to Dec 31, but the bill doesnt come until the beginning of March.  My experiences before I started investing in that county was taxes were always 'prepaid', so if the bill was due May 1, the taxes ran May 1 to April 30.  Long story short each county can have some minor differences to how they do things.  Just make sure you have the whole yearly taxes in your analysis and when they bill them or what periods they cover wont be a huge issue.  Missing a school tax for my one property would be a $2000/year mistake.  That isnt something you want to miss!

Jessica Zolotorofe · Answer

The new tax rate does only come out once a year, but it comes out usually 2nd or 3rd quarter. So what happens is that they base your annual taxes on the prior year's taxes and then they adjust it as soon as the rate is available. So just as an example, if last year's taxes were $2,000, you would pay $500 per quarter 1st and 2nd quarter, then the tax rate comes out and turns out you only owe $1,700 for this tax year, so the last 2 quarters you'll only pay the balance, which will be less than the first half. So Q1 and Q2 should almost always be the same and then Q3 and Q4 should be different, but the same as each other. In your case, from your screenshot above, if you add all 4 quarters of 2016 together and then divide them by 4, you get the estimated tax for Q1 and Q2 of 2017. Make sense?

Patrick Liska · Answer

That's the way NJ does their taxes, first 2 quarters of the year are always different than the 2nd two quarters. I have not checked why they do that. but no, you need to add all 4 quarters. in PA you get taxed 2 times during the year.

Michael DiDonato · Answer

Understanding the property tax system is one of my final frontiers to fully understand for that exact reason. I need to understand how to estimate a municipalities property tax so I can successfully evaluate properties in that area.

Michael DiDonato · Answer

Chris,

I thought that property taxes pay for the municipalities school systems. Are you saying that there is actually a separate tax levied on property that is earmarked explicitly for school systems?

Second question: You say to add Qtr 1 & Qtr 3 together and that would be the total tax bill for the year. Did you mean to add all four quarters together to calculate the total tax bill for the year?

Property Tax Fluctuation Every 2 Quarters?

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