Mar 2, 2021
Unprecedented Economic Impacts Caused by COVID-19 Present Limited Window for Commercial Property Owners to Reduce Real Property Tax Liability
The social, economic, and health impacts of COVID-19 have resulted in the destabilization of neighborhood shopping centers, large and small commercial businesses, office properties, and multi-tenant business-retail properties.
Lockdowns, travel restrictions, and social distancing measures have significantly disrupted commercial business since the beginning of 2020. Consumer habits and preferences have changed. The pandemic has accelerated the shift from brick-and-mortar to online retailing. Additionally, the prevalence of virtual video and teleconferencing platforms demonstrates a growing acceptance for remote working, leading many to rethink traditional office requirements. These changes have contributed to a measurable decline in occupier demand, customer foot traffic, and business activity, which negatively impacts commercial revenues and leads to increased vacancies.
Given the unprecedented economic impacts caused by the pandemic, we believe there is a limited opportunity for many of New Jersey’s commercial property owners to achieve property tax relief by filing a 2021 tax appeal seeking a reduction in their tax assessment.
By now, you should have received a Notice of Assessment from your municipality. It is important to carefully review your assessment in conjunction with the equalization ratio for your municipality to determine whether it is correct based upon fair market value. With limited exception, the New Jersey Constitution mandates that all real property be assessed according to the same standard of value. When the assessment exceeds fair market value of the property, you may be entitled to a reduction.
The income capitalization approach is one of three traditional approaches to value real property and the preferred method of appraising income-producing property. This approach requires an analysis of income and expense data generated from the property, including rents, vacancy and collection loss, operating expenses, and fixed charges. The resultant net income is then capitalized into an indication of present value.
Annual real estate taxes billed by your municipality are based on the assessed valuation of your property. The date of valuation for tax appeal purposes is October 1 of the pretax year. For the 2021 tax year, the date of valuation is October 1, 2020. Therefore, this is the first instance to use data, facts, and figures directly influenced by the 2020 pandemic to support your appeal.
For most of New Jersey’s counties, the deadline for filing an appeal for the 2021 tax year is April 1, 2021 unless your municipality performed a municipal-wide revaluation or reassessment. In that instance, the filing deadline is extended to May 1, 2021. Burlington, Gloucester, and Monmouth counties follow an alternative assessment calendar having an appeal deadline earlier in the year.
Robert B. McBriar, Esq. leads the Tax Appeal Practice Group for the firm. If you are interested in filing a tax appeal this year, please contact Mr. McBriar at (973) 295-3670 before the April 1, 2021 filing deadline. We will review your information and assist you in formulating a strategic plan for prosecuting your appeal. We can also recommend recognized valuation experts to assist in establishing value and defending it before the County Tax Board or Tax Court of New Jersey.
Mr. McBriar frequently appears before County Tax Boards and New Jersey State Tax Courts throughout the state in litigating real property tax appeals. He is experienced in all aspects of state and local property tax litigation and has handled a broad range of tax appeal matters involving office complexes, warehouses, banks, telecommunication facilities, apartment buildings, nursing homes, condominiums, and special purpose properties. In addition, he provides legal guidance and representation involving farmland assessment qualification, property tax deductions, non-profit tax exemptions, and tax exemptions and abatements (PILOTs) under New Jersey’s Five-Year Exemption and Abatement Law, and Long-Term Tax Exemption Law.
DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.