Property taxes are based on the assessed value of your home. Properties with higher assessed values have higher property taxes. If you can prove to your municipality that the assessed value of your home is too high, they will lower the assessed value, and this lowers your property taxes.
Every January or February, homeowners in New Jersey get a postcard from their tax assessor with the assessed value of their home. Look on the postcard for the Assessment Total. This number is NOT an estimate of your home's value. For that, you will have to do a little math.
Go to the New Jersey Division of Taxation website through the link in the References section. Click on your county. Find the three tax ratios for your city. If these three ratios are not between 0 and 1, then divide them by 100. For example, if your tax ratios are 24.86, 29.25, and 33.64, then divide them by 100 to get .2486, .2925, and .3364 Now they are between 0 and 1.
Divide the assessment total on the postcard by the middle of the three tax ratios. If the assessment total is 200,000 and the middle tax ratio is .2925, the result is 200000/.2925 = 683,761. This result is your tax assessor's estimate of your home's value.
Your tax assessor is allowed to be wrong by up to 15 percent when estimating the value of your home. To calculate 15 percent below what your tax assessor estimates your home's value to be, divide the assessment total by the highest of the three tax ratios. If the assessment total is 200,000 and the highest tax ratio is .3364, the result is 200000/.3364 = 594,530
The result from Step 4 is your magic number. If you think your home's value is less than the result from Step 4, you may be able to appeal your home's assessed value and lower your property taxes. In this example, the result from Step 4 is 594,530. If the home in question is worth less than $594,530, then the home's assessed value can be appealed.
Your county's tax board is where you file the appeal of your home's assessed value. You can hire a real estate attorney to file the appeal for you, or you can file on your own if you own the property yourself and not as part of a business with co-owners. The deadline to file is April 1.
Recent comparable sales are the best evidence to bring to the tax board. These are recent sales of properties similar to your own, preferably from around Oct. 1 of the previous year. An appraiser can provide recent comparable sales. Your real estate attorney will hire an appraiser.
There is a filing fee to go to the tax board, and your lawyer will charge a percentage of the first year's tax savings.
Your real estate lawyer may be able to negotiate a solution with the tax assessor so that filing with the tax board will be unnecessary.
Distressed sales like short sales and foreclosure sales are not permitted as evidence of recent comparable sales.