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February 2021

Commercial Property Appeals in the 2021 Tax Year: A Truly Unique Year for Tax Appeals in the Pandemic Environment

The Real Property Tax Appeal filing season is suddenly upon us. While the nature, extent and duration of the Covid-19 pandemic on real estate valuations remain uncertain, many property owners are still dealing with the immediate effects of the pandemic and 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 drastic change in the multifamily residential marketplace with the advent of the rising unemployment rate as well as the wild card 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 may well be certain property types whose valuations are 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 trend may lead municipalities to continue and even expand the practice of filing “reverse tax appeals” through which they seek to increase the assessment 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 February 1, 2021, the tax assessor for each taxing district issues a postcard "Notice of Assessment" which lists, among other information, the property assessment for 2021. It is important to understand that, unless there has been a district-wide 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 that 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 2021 assessment must be filed on or before April 1, 2021. All appeals may be made initially to the County Board of Taxation, but if the assessment (not the equalized value) exceeds $1,000,000, 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, 2021. The only exception to the April deadline is if the municipality has performed a district-wide revaluation or reassessment in which case the deadline is May 1, 2021.

CSG’s Property Tax Group is poised to address each of these issues and we welcome the opportunity to evaluate properties for appeal potential at no charge. Our Property Tax Group has successfully handled appeals involving regional shopping malls, hotels, casinos, corporate headquarters, office buildings, multi-family 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. We welcome the opportunity to evaluate properties for appeal potential at no charge. Tax appeals generally are handled by the firm on a contingency fee arrangement, although other fee arrangements, including application of standard hourly rates, can be utilized.

For more information concerning property tax appeals in the current environment, please contact your CSG attorney or one of the authors listed below.

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Visit CSG's COVID-19 Resource Center.