By Kevin I. Asadi
Monmouth County residents: I received this letter in the mail today from Vin Gopal. I’m sure he’s a nice guy, but a letter like this shows such a gross and shocking misunderstanding of how property taxes work, that I fear what damage he might do to all of us, should he win.
I handle property tax appeals as part of my law practice. Here is how it works, basically: the property you own is given an assessed value by the local tax assessor or by a revaluation company. In most counties, that assessment will remain the same year after year, until the town decides to perform a revaluation or a reassessment.
Whether your assessed value is $100,000 or $1,000,000, either way, your town needs a certain number of dollars in the kitty each year in order to operate. Take the amount of money the town needs divided by their total assessments, and the quotient is called the “general tax rate.” The property tax dollars you pay is the product of your assessed value times the general tax rate.
Most of the time, it can be well more than 10 years between assessments, even though the real estate market values might increase or otherwise change dramatically during that time. Because of this, assessors have to certify to their town’s “equalization ratio” every year. This ratio is, basically, a fraction, the numerator of which is the total assessments in town and the denominator of which is the fair market value of all of that assessed property. Thus, a property’s “implied value” is the assessed value divided by the equalization ratio. If you can prove your property’s fair market value is 15% less than your implied value, then you could win a tax appeal.
Let’s look at an example. When I first started doing this, the equalization ratio in Asbury Park was around .20. This means, on average, property in Asbury Park was assessed for 20% of its fair market value. Meanwhile, I had a client who purchased a fancy condo in Asbury for around $900,000. His assessment was around $500,000. I told him to appeal. At first he thought I was nuts. He thought he was getting away with murder! Only after I explained the above did he realize how severely over-assessed he was. I was able to save him many thousands of dollars per year. How long was the prior owner getting ripped off by the city? How many thousands of people similarly thought they were under assessed when in reality they were seriously *over* assessed? The answer is, unfortunately, very many.
Most people are not tax appeal lawyers. Most people do not understand this. Why would they? It’s complicated, and convoluted.
The Monmouth County Pilot Program sought to simplify this. Now It’s easy. Think of your equalization ratio as 1.0, or 100%. If your property is worth less than your assessed value, you win! That simple. No more implied value or other layers of confusion. Did people’s assessed values go up? Mostly, yes. So what!
“OH MY GOODNESS! MY ASSESSED VALUE WENT UP FROM $150,000 TO $300,000! MY PROPERTY TAXES DOUBLED, RIGHT?” Wrong.
The total dollars needed by the town to operate remains the same. Therefore the tax rate mathematically decreased. But people do not see their tax rate. They saw their assessed value rise, and some people flipped out without understanding. Mr. Gopal must have been among those people, unfortunately.
I hate to sound like a partisan operative because I’m really not. But I am compelled to mention that Mr. Gopal is a Democrat who cut his teeth in a political machine environment that has an extremely poor record for controlling property tax increases. I happen to own two properties in Monmouth County: one in Freehold Borough (100% Democrat governing body) and one in Freehold Township (100% Republican governing body). In 2017, my property taxes went up by an astounding $1800 in Freehold Borough. During the same period, my property taxes DECREASED by around $180 in Freehold Township. I don’t know if that has anything to do with Republican/Democrat differences or not, but since Mr. Gopal generated this mailer, I could not help but think about that.
If you truly care about controlling property tax increases, then I suggest you cast a vote in favor of Jennifer Beck, who co sponsored the Pilot Program and whose tax policy was hugely effective in tamping down the sort of tax increases I’ve paid for in Freehold Borough.