Tax Appeals Filed in 2009 Nearing the All-Time High

     A recent article published in the Newark Star Ledger noted that the number of property tax appeals filed in New Jersey for the 2009 tax year is considerable. The author notes that nearly 16,000 tax appeals were filed in the State of New Jersey in 2009 which is nearing the record of 16,300 set in 1992. In Ocean County, appeals have tripled to more than 14,000 from the levels filed in 2008. In Essex County, the number of appeals is nearly twice the amount filed in 2008.

     Interestingly, the article highlighted several arguments that taxpayers often make in seeking a reduction in their property tax assessment. These often range from “I overpaid for my property” and “I bought at the peak of the market” to “my home is outdated and needs to be modernized”. For those property owners who did not file a tax appeal in 2009, they will have to wait until the 2010 tax year to challenge their assessment as the deadline to file for 2009 was April 1st

   Nonetheless, it is not too early for a property owner to start preparing for the inevitable tax appeal next year. Below are a few tips that will aid all classes of taxpayers from the residential homeowner to the commercial developer.

  1. DO YOUR HOMEWORK – At times, a taxpayer will focus on the attributes of their own home and disregard how their property sits in the general scheme of the surrounding neighborhood.   An Internet search or your local real estate broker may be willing to assist you in locating comparable sales (known as “comps”) that can be used to justify a reduction in your assessment if a home similar enough to yours has sold for a value less than what your equalized assessment is. However, as any taxpayer will quickly find, no two properties are exactly alike. Therefore, it is important to conduct thorough research to make sure you have the best and most comparable information available.   Ideally, a licensed appraiser should be consulted for a professional opinion. 
  2. VERIFY YOUR INFORMATION – The tax assessor in each municipality maintains a property record card for every property within its taxing district. The property record card identifies the particular attributes of each property and provides an excellent starting point for anyone looking to lower their taxes. Sometimes, the property record card contains an innocent error or miscalculation that the tax assessor may relied upon for determining a property’s assessment.  Accordingly, sometimes a property owner can justify a reduction in its assessment based upon a correction of an error in the property record card. A property record card which is a public record can usually be obtained by contacting the tax assessor’s office – however, every assessor’s office has their own procedures for obtaining a copy of the card which should be strictly followed as a matter of courtesy and procedure
  3. KNOW AND MEET THE DEADLINE – The deadline to file a tax appeal for the 2010 tax year in most municipalities will be Thursday, April 1, 2010. In those municipalities undergoing a revaluation and reassessment which may not be concluded by the statutory deadline, the April 1st filing deadline might be extended (but not automatically). If the filing deadline is extended, the taxpayer will receive a written notice from its tax assessor listing the revised filing date. By rule and procedure, tax appeals must be RECEIVED by the filing deadline. 

     One of the easiest ways for a taxpayer to lose their right to appeal is to simply mail in their application by the filing date. Most people will simply drop their federal and state tax returns in the mail at the same time they file their tax appeals. This may past muster with Uncle Sam but it will not under New Jersey tax appeal laws.   To be safe, a taxpayer can hand deliver the appeal to the local County Board of Taxation or the Tax Court on the deadline date, but it must remember to hand deliver or mail copies to the appropriate recipients noted in the appeal form. 

Case Development - Realty Transfer Fees

     On October 30, 2009, the Tax Court of New Jersey decided Mack-Cali Realty, LP, et al. v. Clerk of Bergen County, et al. which presented the question of whether the exemption from the realty transfer fee allowed by N.J.S.A. 46:15-10(a) where consideration is less than $100.00 is applicable from two conveyances from Mack-Cali to other limited liability companies which it was the sole member. While the decision will likely be appealed to the Appellate Division, the decision currently stands for the proposition that a deed between commonly-owned entities that transfers unencumbered real estate and for which no other consideration passed from grantee other than the amount set forth in the deed, then that transfer is likely exempt from the realty transfer fee requirements.

     The Tax Court construed the definition of "consideration" is stated in terms of “the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, …” (emphasis added).   As such, while the definition includes the amount of any mortgage to which the transferred property is subject, it does not otherwise include any element not paid by the grantee to the grantor. Therefore, it does not include an indirect benefit of the kind imputed by the New Jersey Division of Taxation in affirming the County Clerk's determination that a realty transfer fee be imposed.  Accordingly, the Tax Court held that the consideration for each transfer was $10.00 as stated in the deed and the transactions are exempt from the realty transfer fee.

My tenant moved out and left its junk behind. Now what?

     Imagine a situation where a burglar breaks into your home and “borrows” some of your possessions without paying for them. On the way out, the burglar drops its wallet on your kitchen floor. Instead of returning the wallet to the burglar, you immediately throw it in the trash. Do you think that you should have to compensate the burglar for failing to notify before throwing the wallet away? 

 

     Of course you shouldn’t. But, if you were a landlord and the burglar was your tenant, and you had a lease to allow the tenant to “borrow” your space in exchange for paying rent, the analogy might have a different conclusion.   That’s because New Jersey has a Tenant Abandoned Property Act (N.J.S.A 2A:18-72 et al.) (the “Act”), which permits a landlord of commercial or residential property to dispose of any tangible goods, chattels or other personal property left upon a premises by a tenant, but the landlord must reasonably believe under the circumstances that the tenant has left the property upon the premises with no intention of asserting any further claim to the premises or the property and the landlord must put the tenant on notice that the property will be disposed if not timely claimed.  An exception is made for perishable items, which the landlord may freely dispose in order to maintain the premises in a sanitary condition.  

 

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