New Jersey is not a State that will automatically reassess a property upon it being sold. New Jersey requires reassessments if it has been more than 10 years since the last reassessment was done in the subject municipality or if the coefficient of deviation (COD) for a municipality’s property assessments exceeds 15%. The COD is a measure of how uniform or consistent property assessments are within a municipality. If the COD is above 15%, it suggests that some properties are being overvalued or undervalued, and a reassessment may be necessary to ensure that property taxes are fairly and accurately distributed. A tax reassessment is done to resolve inequity in taxation by bringing every property’s assessment to 100% of its market value.
Also, if there is a significant change in the real estate market or property values within a particular municipality, the local government may choose to conduct a reassessment outside of the 10-year cycle. This could occur, for example, if property values have increased or decreased dramatically in a particular area or if there have been significant changes in the physical characteristics of properties in the municipality, such as the construction of new buildings or the demolition of old ones.
People typically fear a tax reassessment or reevaluation because they fear their taxes will increase. However, in a reassessment the taxes could go up, they could go down or they could essentially remain the same. About 1/3 of the properties will see a tax increase, about 1/3 will see a decrease and about 1/3 will have their taxes remain about the same. This is because whatever the overall percentage increase in the value of the homes in the municipality is, the tax rate for that municipality will decrease by the same percentage. Thus, a reassessment is truly to resolve any inequity in how properties in a municipality are being taxed. So next time your municipality is up for a tax reassessment try not to stress and if you receive a valuation that you believe is inaccurate you can always file a tax appeal.
Some other information about tax assessments that you may find interesting or helpful are: 1.) if the reassessment is done by the municipality’s tax assessor rather than an outside entity it will likely save the municipality a substantial amount of money, 2.) you can refuse entry to the inspectors, however, if you do this it could negatively impact the assessment as the inspector will have to guesstimate as to what the inside of the home looks like, 3.) there is no cap in New Jersey as to how much the assessed value may increase by, and 4.) the State requires the assessor to review comparative sales within the last 2 years (sales closest in time will be given or should be given the most weight).
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