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Commercial Property Appeals in 2011

December 2010

As commercial properties continue to endure lower values and increased vacancy rates, a staggering 25,000 new real property tax appeals have been filed in the New Jersey Tax Court alone in 2010.

If commercial property owners are to compete successfully, they need to cut costs. A reduction in real property taxes can benefit owners in several ways: for those that are landlords with gross leases, it is a direct savings in the operation of the income producing property; for those that are landlords with net leases, it helps keep tenants satisfied and stabilizes vacancy rates; and for owner-occupied commercial buildings, the reduction in property taxes goes right to the bottom line.

It is clearly prudent for commercial, industrial and multi-residential property owners to consider appealing their local real property assessment as one of the key mechanisms for weathering the ongoing difficulties in the real estate market.

On or before February 1, 2010, the assessor for each taxing district issues a “Notice of Assessment,” which lists, among other information, the property assessment for 2011. It is important to understand that, unless there has been a district-wide revaluation, the “assessed” value placed on property is not the “market value” claimed by the municipality. Rather, the municipality must defend the “imputed” or “equalized” value of the property, which takes into account the average assessment in the district as a percentage of the average useable sale in the district. This equalized value is often much higher than the assessment and is the value the municipality must defend. Thus, just looking at the assessment does not inform the decision as to whether a tax appeal is warranted.

An appeal from the 2011 assessment must be filed on or before April 1, 2011. All appeals may be made initially to the County Board of Taxation, but if the assessment (not the market value) exceeds $1,000,000, then the appeal may be made directly to the New Jersey Tax Court. Direct appeals to the Tax Court must also be made by April 1, 2011.

If a property owner has engaged in a major capital investment or expansion of its property, or plans to do so in 2011, the property owner should also seek advice concerning a potential tax appeal because the assessor will impose an “added assessment,” which has a separate filing deadline.

If you are interested in exploring your individual real property tax appeal, Wolff & Samson PC is experienced in the prosecution of commercial, industrial and multi-residential properties, as well as special use properties and hotels. We will be pleased to undertake an initial analysis to determine the potential merits of a tax appeal on your particular property. If you decide to appeal, Wolff & Samson, in many cases, will do so on a contingent fee basis.

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For more information concerning property tax appeals, please contact:
John F. Casey ¦ Member of the Firm ¦ Phone (973) 530-2017 ¦  jcasey@wolffsamson.com
Jill D. Rosenberg ¦ Member of the Firm ¦ (973) 530-2102 ¦  jrosenberg@wolffsamson.com