Is My Property Tax Going UP or DOWN??

He said, she said. Depending on whether the governor is speaking, or your mayor, your property taxes are either going up or down. Which one? My new blog will cut out all the spin, and keep it simple.

Bottomline, your property taxes ARE going UP. By how much? 10-15%!
We have to wait and see.

Here are two tables, with a lot of numbers. Table on the right is from the recent 4Q10 tax bill, the other is from 4Q09. The 1st column tells you what % of your property tax goes to Hudson County, to Schools, and to your Municipality (Hoboken, Jersey City etc). Hudson County tax board sets the county tax and your municipality sets its own tax. Column 2 shows what the rate actually is. A quick glance will tell you all numbers in Column 2 INCREASED in 2010, and the overall tax rate went from 4.489% to 4.745%.

	2010 4Q bill				2009 4Q bill
	% Alloc (Col 1)	Rate % (Col 2)			% Alloc (Col 1)	Rate % (Col 2)
County Tax	31.70%	1.504%		County Tax	30.20%	1.356%
School Tax	25.27%	1.199%		School Tax	26.20%	1.176%
Muni Tax	43.03%	2.042%		Muni Tax	43.60%	1.957%
	100.00%	4.745%			100.00%	4.489%

There is another component of the puzzle, director's ratio, which is determined by the Hudson County. According to the Hudson County tax board, the Hoboken director's ratio for 2011 is 29.63% (up from 27.16%) and Jersey City is 29.43% (from 26.75%).


How is property tax calculated?

Property tax = Assessed Value x Tax Rate
Assessed Value = Market value x Director's ratio
So Property tax = Market value x Director's ratio x Tax Rate.


OK, by this time, you have realized, things are not looking good. Director's ratio and Tax rate are both higher now (or in future) than it was before.

Is everyone's taxes going down as promised? NO!!


The municipality's mayor can only control 43% of your tax bill. If we are to believe the recent press release of 5% tax decrease, you are still looking at a less than 2.5% cut in your tax bill all things equal. But all things are not equal.

The following table is based on home value of $500K.

		Home Value	Tax Rate	Director's Ratio	Actual Annual Tax
a	2011	500,000	4.562%	29.63%	6,759
b	2011	500,000	4.745%	29.63%	7,030
c	2010	500,000	4.489%	29.63%	6,650
	2010	500,000	4.489%	27.16%	6,096

Say your house sells for $500K. In 2010, you would have paid $6096 in taxes.

Scenario C: We already know the Hudson County tax board has raised the director's ratio for 2011. Based on last year's tax rate, that is a $554 increase.
Scenario B: What if we used the new director's ratio and the tax rate that is on the 4Q10 Hoboken tax bill? Then its a double whammy... and your taxes increase by $934.
Scenario A: But our mayor promised a 5% tax decrease. Ok, but the municipality can't control the county and school taxes, and if we factor in the 5% tax decrease from 2009 (i.e. 95% of 1.957%), we STILL get a tax INCREASE of $663.

Based on these scenarios, I estimate Hoboken property taxes are going up by 10-15%. I don't know when, and whether things will change, but I will be budgeting some extra cash to pay my bills next year.

What else can you do about it? As has been said again and again, you can only appeal your assessment, not your taxes. So appeal your assessed value. Since market prices are still low, this is a good year to win.

Remember, if you hire a law firm or realtor to do this, make sure you get someone you trust. Read your contract. Many will offer a low-ball assessment (to make sure they get something of the contingency), but you can't walk away and do it on your own (or hire someone better).

Good luck. Deadline for appeal in Hudson County is April 1.

Hudson County Tax Board
Hoboken Mayor Press Release

Based on positive feedback, this year I will be offering my consulting services that will help you appeal your own taxes. In 2010, I successfully lowered my taxes by  30% (I have a credit in my 4Q bill as a result). Please drop me an email at dalia.tole@gmail.com if you want more details.

Property Tax Appeal... The Next Steps

Introduction
In my first blog, I suggested every homeowner should review their property taxes and appeal them if they seem unfair.
In the early to mid 2000s, it was difficult to appeal property taxes and get a reduction, primarily because home prices were on the rise, and using recent sales would actually increase your assessment. However, the big picture was that home values were increasing, and property owners were happy.
Then the bubble burst. No surprise, 2010 saw a large number of property tax appeals across the country, even higher than 2009. One realtor estimated about 10% of homeowners in Hoboken filed their appeal before the April 1 deadline.

Basic Rules
The rules are not difficult. You cannot complain your taxes are too high compared to your neighbor. You should say 3-5 similar houses in your neighborhood are worth say 15% less than yours, therefore your assessment should be lower. The sales needed to be in the 12 months prior to 10/1/09. You cannot fight over pocket change--market value too close to assessed value will result in automatic denial of your case.

This year I received 3 mailings from realtors or appraisers who claimed they could reduce my property taxes. If they could do so, so could I. There was no magic here, no secret comparative sales. I am confident of my "Google" and Excel skills. If you are as well, I encourage you to at least try it yourself (or use a software). An expert will charge either a flat fee ($500) or a percentage of savings. A formal appraisal would cost $300, and another $150 for the expert witness to appear in court. You could use the appraisal from your refinance, but it would be tough to get that "expert" to appear in court. Anyway, I found a Hoboken-based blogger was posting helpful hints on her website. Some realtors were doing the same. I found most of their tips to be accurate and the task did not seem daunting.
Kathy Zucker's Blog
Remax Realtor Brian Murray's Blog (also includes a calculator)

Hudson County Tax Board

Hoboken Tax Assessor 

Sal Bonaccorsi
Hours: M - F, 9 am - 4 pm
Phone: (201) 420-2024
Fax: (201) 239-9847

First Steps
I asked a lot of questions, and got a lot of answers. Many of these answers came from the Hoboken assessor's office and the Tax County Board. The rest of the answers came from the above mentioned blogs. After about 5 hours worth of work, I submitted my appeal with a compsheet in March. I did it alone this year, without any "expert" or software (disclaimer: I used to create another type of "comps" for a living, so my case is not typical). I received a mailing in early May stating a court date has been scheduled.

Next Steps
I was a bit nervous about the next steps as I had too many questions unanswered. I knew last year, several Hoboken homeowners had settled, yet no offer was in my mail.

1. Given the number of appeals, had anyone who appealed their Hoboken property taxes received a settlement offer from the city in 2010? 
2. How many days before the court date was the offer of settlement? 
3. Was it a good enough offer to settle?  
4. What happens if you settle?
5. Once it goes to court, does it mean win OR lose? Or is it a compromise?
6. How long does the hearing last? How about the entire court visit?

Answers
The court date was approaching, and I didn't have any definitive answers, so I decided to call the enemy (I mean counterparty). Here are the answers that you have been waiting for.

1. Yes, settlements are being offered if you ask for them. If you call 1-2 days before your hearing, the Hoboken assessor will let you know if a settlement will be offered.
2. Unless you call, you will not hear from the Hoboken assessor (in previous years a letter may have been sent a week to 3 days prior).
3. It depends. In my experience, the Hoboken tax assessor is a reasonable and intelligent person. The offer of settlement would depend on how strong your case is (i.e. robust comps, illustrative photos etc.) and how your persuasion skills are. The settlement could be 100% of what you ask for.
4. If a settlement is reached, and you are satisfied, I suggest you walk over to City Hall and sign a form (instead of waiting in the mail). You will get a copy stating what your assessment is and the reason for your assessment (e.g. "reflects market value"). You do not need to appear before the court as the form will be presented by the Hoboken assessor. Tax reduction will be applied to your November (4Q) bill.
5. The Hudson county tax board said given the number of Hoboken cases, you can expect to wait 1-2 hours (several people may have been scheduled at the same time). Everyone will be heard.

Best of luck to all those who appealed their taxes. If you didn't, I urge you to review your property taxes for next year. Comments welcome!