In a market where economic indicators continue to show encouraging signs (e.g., sustained favorable employment numbers and rental rates, and continuing low levels of inflation), the prospect that property values will appreciate remains real. Because of questionable municipal assessment practices, often blindly motivated by the objective of maximizing tax ratables, careful scrutiny of assessments, especially in changing market conditions, is warranted. Consequently, it behooves commercial property owners to review their property tax assessments with their professionals now to ensure that their assessments are in line with present values and to verify that they are not paying more than their fair share of taxes. At the same time the potential exists that a successful appeal can work to lock in assessments at current property values, even in the face of possible further increasing values.
Because New Jersey law provides for a “Freezing” of assessments for a period of two additional years, beyond any successful year appealed, the tax appeal vehicle has the additional positive effect of providing property owners with the predictability and comfort associated with knowing the expected levels of their tax obligations into the future as well. In fact, because assessments are generally not modified until a town-wide revaluation or reassessment program is implemented (usually every 5-10 years), there is a real prospect that a lower assessment achieved as a result of a successful appeal could actually remain in place for well beyond the statutorily guaranteed two year “Freeze” period.
As a result, we believe that there continue to be substantial opportunities for property owners to realize significant tax savings and lock in current values for the foreseeable future. In addition, non-profit, religious and certain institutional organizations (e.g. hospitals) can take advantage of real property tax exemptions that apply, either in whole or in part, by virtue of express statutory enactments.
We therefore encourage commercial property owners and organizations who may enjoy exempt status to contact their real estate professionals to determine whether a tax appeal is warranted in 2020. Although the 2020 tax appeal filing deadline is not until April 1, 2020, unless a town-wide reassessment or revaluation is in place, in which case the deadline is May 1, 2020, it is never too soon to take action.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.