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When shouldn't you file a property tax appeal?

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It's a good time to consider a commercial property tax appeal in New Jersey, but one expert said you shouldn't always be so quick on the draw.

In fact, it could end up costing you money if your property is actually underassessed by the municipality, said Susan A. Feeney, a property tax attorney with McCarter & English. It's not overly common, she said, but a town can walk away with the upper hand if such a case gets before a judge.

That's because municipal attorneys almost always file counterclaims after a property owner files an appeal, Feeney said. That way, the town is in a position to get the assessment increased if they find it was too low to begin with.

"If you're the taxpayer, you want to do your homework before you file," Feeney said, noting the firm will do an evaluation before taking a prospective case.

She added that there are different approaches to gauging the value of a property, including one based on the income it produces and another based on its estimated sale price. That's why "attorneys and appraisers generally work hand in hand to look at properties together, because you really do have to evaluate the property from the market point of view, and the appraisers obviously have a lot of data."

Because of the market, most of the office and retail buildings that are reviewed by the firm are found to be overassessed, she said. It's not quite as common with industrial and multifamily properties.

But while some tax assessors don't react to changes in the market, she also cautioned that others "are proactive, and they reduce assessments when they need to because they'd rather be in a situation where they're not litigating and not giving money back."

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

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Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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