Assessed Value vs. Equalized Value
Since we are moving rapidly into the height of municipal budget season, it seemed like a good time to discuss some terms relating to property assessments that can be confusing to some people. Hopefully, we can clear up some of this confusion.
Let me begin by stating that I do not profess to be a residential property assessment expert, so if I miss some subtle nuance in this article, please forgive me. We are just going to be dealing with some basic understanding of terms commonly used with residential property assessments.
“Assessed value” refers to the value that your home is reflected on the tax rolls of the municipality. It is on that amount that your annual property taxes are computed. The assessed value of your home will not, nor does it necessarily have to, equal the market value of your home (more on that later). The sum of all of the taxable values of a municipality is referred as the “net valuation taxable”, “NVT” and sometimes “ratables”.
From July 1st through June 30th of every year, the State tracks property sales by type of property and municipality. The sale amounts are compared to the assessed value, and an “equalization ratio” is determined for each town. This is an effort to estimate the market value of the properties within each town. A downside to this “equalization ratio” is that, by the time it is released, it is already at least 6 months old. “Equalized value” is therefore the estimated market value of your home compared to the Assessed Value.
So, if the assessed value of my home is a lot more than the equalized value, I should appeal my taxes, right? Maybe yes, maybe no. It is my understanding that the tax courts allow a 15% variance off of the equalization ratio before an appeal is considered. I have also heard that if there is a home in your town exactly like yours, but it is assessed for a lesser amount, you may have grounds for an appeal. If you do have concerns regarding your assessed value your local tax assessor should be available to discuss and explain your assessment to you.
We understand that the whole discussion of assessments can be difficult to understand, so if you feel that we can help, please feel free to give us a call.
Bud Jones specializes in annual and special audits for municipalities, counties, joint insurance funds, school districts, county colleges, libraries and federal and state grants. If you have any questions or would like to discuss further, please contact us at 973-298-8500.