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.
Great idea, Dalia! What are your rates and can you send me more info about your tax appeal services? zhobokenmom@gmail.com
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteHere is a comment posted on fellow blogger Kathy Zucker's site, and my answer.
ReplyDelete"We were thrown out when we appealed, despite a number of reasonable comparables. I think it works for condos but not for houses. You may want to modify your terminology to reflect that. We pay a lot more than some of our neighbours but no tax decrease - they are looking for very low valuations (lower than market) to decrease on houses..."
MY RESPONSE: I had a single family house and we would get those property tax appeal mailings all the time. We lived on a block with very similar houses, which is rare in Hoboken (much more common in Jersey City and suburbs). So appeal is more difficult but certainly not impossible.
The rules (rates, ratio etc) are the same for houses and condos in Hudson County (they are different in NYC).
There can be 2 issues: You can have great comparable properties (within 1 mile in the same city), but they also have to be sold in the Oct-Oct time frame to qualify. This may not have happened in the past year. Ironically, for the 3 years we lived on Long Island not a single house sold on our block. Then when we sold, 3 houses were suddenly on the market.
The second issue could be improper adjustments. For example, the comp had a different number of rooms, or different features like fireplace, deck, basement (finished or not). Or the style and construction was different (frame vs brick, Tudor vs Colonial). Some of these can be adjusted for, but others cannot. If you give me the address in question, I can look into it more. Feel free to ask her to email me.
I do charge more for condos with 3+ bedrooms and single/multi family houses. It's more work :)