Property tax appeals continue to rise in New Jersey, for a variety of reasons, including home values in the Garden State.

More NJ taxpayers are filing property tax appeals. (Creatas, ThinkStock)
More NJ taxpayers are filing property tax appeals. (Creatas, ThinkStock)

In Atlantic County, which includes Atlantic City where several casinos have recently closed, causing significant financial problems, property tax appeals are up 33 percent over the past five years. In other parts of the state, the increase has been in the 10 to 25 percent range.

So why is this happening?

According to Jeff Otteau, president of Otteau Valuation Group Inc., home prices in New Jersey are still down by about 20 percent from the peak prices before the Great Recession in 2006 - which is twice as much as the national average.

"That is continuing to create a high level of tax appeals being filed as property owners seek to have their property taxes reduced in relation to the drop in the value of that property," he said.

Otteau said that in some parts of  New Jersey "hurricane Sandy has also had a hand in the increased number of tax appeals. It caused a significant decline in property values in shore communities."

He said there was also the re-mapping of flood zones in those areas "which increased the flood insurance premiums, so there's really been a multi-faceted layering effect, all of which are increasing the number of tax appeals being filed."

According to Otteau, a property tax appeal is achieved on the merits of what your property is worth relative to the market.

"With more property tax appeals being filed, those who do not have their property assessments reduced, actually end of paying an increase in taxes," he said.

Otteau said towns calculate their tax rate by dividing the total value of its assessments into the total budget that they need to raise to run their government, and as the values of property decline the tax rate will go higher.

So is filing a tax  appeal worth it?

"The answer is sometimes yes, sometimes no," Otteau said. "In order to have your property taxes lowered you have to prove your property is over-assessed by more than 15 percent."

In New Jersey, tax appeals must be filed with a property owner's municipality within the first three months of the New Year, and then typically they will be given a hearing within three months at their local county tax board.

Otteau said if taxpayers are not successful, they can file an appeal with the state tax court, but "that can take years before you would actually get a hearing date, because of the backlog that the judges have with so many being filed."

He said usually it's not worth the expense of hiring professional experts along with an attorney and a licensed real estate appraiser to appear on your behalf, because the potential savings you could realize on your home would be less than what the process would cost.

According to Otteau, many property owners are slow to recognize the decline in the value of their homes.

"If you're not actively trying to sell it, you may not be faced with the reality that 'hey, my house is worth a lot less and maybe my property taxes should be reduced,'" he said.

He also said there has been a decline in the value of commercial real estate in New Jersey, particularly office buildings, because of lower occupancy rates. This decline has lowered the contribution of revenue collected by towns, which in turn, means the residential property tax base needs to pay higher taxes to make up for the loss in value in commercial real estate.