Real Estate Tax Appeals: Who Has the Burden of Proof
Recently, many municipalities have performed revaluations in order to make certain that all their assessments reflect the current market value of the properties located in their municipality. When a property owner files a tax appeal to challenge a tax assessment after a revaluation, who bears the burden of proving whether the new assessment is correct – the tax assessor or the property owner? The answer is the property owner by virtue of the “presumption of correctness”.
When appealing a tax assessment, it is very important to understand how the presumption of correctness works. Once a tax assessor imposes an assessment, the County Tax Board and Tax Court are required to presume that the tax assessment is valid and the taxpayer is required to rebut the presumption by cogent evidence. The New Jersey Tax Court has held that in order to overcome the presumption, the taxpayer must produce evidence that is “definite, positive and certain in quality and quantity.” This is a difficult standard to comprehend, but clearly requires a good showing by the property owner.
The presumption of correctness permits a tax assessor to win a tax appeal without producing any evidence at all, a tactic used by many revaluation companies in defending tax appeals. For example, if a taxpayer presents sales that are not very comparable because they are too old, not in the same town, or otherwise not very similar to the property under appeal, the tax assessor or revaluation company can merely argue that the presumption of correctness has not been overcome and the assessment cannot be changed. If the taxpayer produces “pretty good” comparable sales, the tax assessor or revaluation company can but merely challenge the comparability of the sales offered by the property owner and argue that once again the taxpayer has not produced sufficient evidence to overcome the presumption. This is very frustrating to property owners because they end up losing a tax appeal without the tax assessor or revaluation company submitting any evidence of value.
It is very important to understand that the tax assessor and revaluation company have no obligation to come forward with comparable sales and can merely rely upon the presumption of correctness in defending a tax appeal. Since the presumption is a hurdle that is somewhat difficult to overcome, it is a good idea to appear before the Tax Board or Tax Court with a competent appraiser. However, depending upon the size of the tax assessment, it may not be cost effective to pay for an appraisal. If a property owner chooses to proceed without an appraiser, it must come armed with very good evidence in order to over come the presumption of validity.
A recent Appellate Division case, which was decided on January 22, 2007, provides a good discussion of the presumption of validity. You can view the case here.
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8 Replies to “Real Estate Tax Appeals: Who Has the Burden of Proof”
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My property was just assessed for almost $10,000 more than what I purchased it for. Is it worth filing an appeal? Thanks.
We are prohibited from providing legal advice over the internet. In general terms, $10,000 may result in only a small amount of taxes depending upon the tax rate in your town. With such a small amount in dispute, you may be able to settle the case with the assessor after you file the appeal. Also, you must take into account the Chapter 123 ratio which is explained at pages 13 and 14 in the NJ Tax Small Claims Case Handbook which can be found on the New Jersey Tax Court’s website. The Chapter 123 ratio gives the town a margin of error in non-revaluation years. The link to the handbook is http://www.judiciary.state.nj.us/taxcourt/dcmsmallbook.pdf. I hope this helps.
My town just did a re-evaluation. My property is located on a small lake in town. The tax assessor is now appealing his own assessment (for all homes on the lake). He told me that people in the town were complaining that houses on the lake were assessed too low. He is stating that two properties, one on the lake and one across the street, were sold in the last couple of years. Both new homeowners demolished the existing homes and rebuilt. The claim is that the sale price on the property was only for the land. Is this a reasonable basis for an appeal? It seems that this rebuilding was up to the homeowner after the purchase and they could have lived in the home as sold.
We are not able to provide legal advice over the internet. However, in terms of basic New Jersey law assessment law, the value of the land is a component of a valid tax assessment. Often times, the land value for homes near lakes and oceans go for a premium resulting in higher assessments. In many towns where properties are purchased as “tear downs”, the buyer is really only paying for the land value. It is important to note that the existing use of the property (ie. smaller home on valuable lot) is not controlling. Rather, property must be assessed at its “highest and best use” which takes into account the existing use and other uses. However, sometimes the buyer has other motives and will pay in excess of the fair market value. In such a case, the sale may not meet the definition of a comparable sale. A good appraiser can attorney can help you investigate the sales and look for other sales that may show a different picture. I am happy to discuss this matter with you if you call my office.
How do i ammend my property tax appeal form in order to include new evidence after i have mailed it to the board of Taxation?
You should consider calling your County Tax Board and ask them directly. Most Tax Boards are helpful. It is important to remember that any information that is sent to the Tax Board must also be sent to the tax assessor.
I just went through a hearing, in which the hearing officer threw out all my comparables because none were in the exact architectural style of my house. I have a Bungalow-style home; while it’s not all that rare, no other Bungalow homes had sold in my neighborhood in recent years. I had filed 12 comparables, all recent sales, all roughly the same house size and lot size, all nearby. My impression was that the closer the match, the stronger the evidence, but that’s there’s no requirement of same style. If her interpretation is correct, it would be impossible for me to challenge the assessment no matter how high. Is there anything in the code that defines “comparable,” and do I have any recourse? The tax assessor presented no evidence and made no rebuttal to my comps once she made her statement. Thanks!
I am prohibited from providing legal advice over the internet. However, as a general rule, there is no requirement that a comparable sale be the same exact style as the subject property. The sale needs to be similar, not identical. It is important to remember that once a sale is found to be admissible into evidence (ie. found to be comparable), the Tax Board or Tax Judge needs to decide how much “weight” to give the sale – little or a lot. It is possible to have sale admitted into evidence, but still not overcome the presumption of correctness (see blog on presumption of correctness).
There is no definition of a comparable sale in the statutes governing tax assessments. The degree of similarity varies from cases to case and often times depends on the nature of the property. The Appraisal of Real Estate is a very good book on appraisal concepts and lists nine basic elements of comparability. I hope this helps.