The Real Property Tax Appeal filing season is suddenly upon us. The extent of the COVID-19 pandemic on real estate valuations remains uncertain, and many property owners may not have even begun to focus on how it has affected their property tax assessments.
The sector-specific impact of the pandemic
Certain property types appear to have been indisputably negatively impacted by the pandemic. Topping that list are retail and hospitality properties, including restaurants. Closely following those asset classes is the office building segment, as the amount and format of office space required by tenants in the “new normal” will be, by many accounts, fundamentally different. There could also be a change in the multifamily residential marketplace with the advent of how and where people will choose to live after having experienced the health consequences of the pandemic in our densely populated metropolitan area.
At the other end of the spectrum, there are certain property types whose valuations were actually enhanced by the consequences of the pandemic. Warehouse and distribution centers will likely continue to experience further market appreciation, as they were prior to the pandemic. Importantly, this substantial market appreciation may render these properties vulnerable to “reverse tax appeals” being filed aggressively by numerous municipalities seeking to increase the assessments on those properties. Further, a municipality has the right to file a counterclaim to seek to increase your assessment if it believes the property is underassessed. Therefore, it is critically important to properly evaluate your case prior to filing.
What you need to know this tax appeal filing season
On or before Feb. 1, 2022, the tax assessor for each taxing district issues a postcard “Notice of Assessment,” which lists, among other information, the property assessment for 2022. It is important to understand that, unless there has been a districtwide revaluation, “assessed” value is not necessarily the “market value” claimed by the municipality through the assessment. Rather, the municipality must defend the “imputed” or “equalized” value of the property, which reflects the assessments in the district are a percentage of true market value as judged by the average of all usable sales in the district. This “equalized” value is often higher than the assessment and is the actual value to be analyzed in determining whether the property is fairly assessed.
An appeal of a 2022 assessment must be filed on or before April 1, 2022. All appeals may be made initially to the County Board of Taxation, but if the assessment (not the equalized value) exceeds $1 million, then the appeal must be made directly to the New Jersey Tax Court. Direct appeals to the Tax Court must also be made by April 1, 2022. The only exception to the April deadline is if the municipality has performed a districtwide revaluation or reassessment, in which case the deadline is May 1, 2022.
CSG Law’s Property Tax Group is poised to address each of these issues, and we welcome the opportunity to evaluate properties for appeal potential. Our group has successfully handled appeals involving regional shopping malls, hotels, casinos, corporate headquarters, office buildings, multifamily apartment buildings and complexes, industrial properties from warehouses to special purpose properties such as chemical plants, power generation plants, oil refineries, breweries, regional reservoirs, and recreational properties such as golf courses and amusement parks. Our group also vigorously defends “reverse tax appeals.”
For more information concerning property tax appeals in the current environment, please contact John R. Lloyd, practice group leader, Property Taxation Group (973-530-2098 or jlloyd@csglaw.com), Jill Daitch Rosenberg, member of the firm (973-530-2102 or jrosenberg@csglaw.com), or Anthony J. Marchese, counsel (973-530-2165 or amarchese@csglaw.com).
