PACKET EDITORIAL, May 23
By: Packet Editorial
If there’s one word that is guaranteed to strike fear into the hearts of New Jersey property taxpayers, it’s revaluation.
As if paying the nation’s highest property taxes is not burdensome enough, homeowners are subjected once every decade or so to the trauma of having their property reassessed. The trauma is particularly acute in suburban central New Jersey, where it’s not at all unusual for property values to have doubled, or even tripled, since the last revaluation.
Homeowners in Princeton Borough and Princeton Township are now bracing themselves for revaluations that are scheduled to take place in 2008. Their counterparts in West Windsor and Plainsboro have just gone through their towns’ revaluations, and are now learning, as municipal tax rates are struck, how their new assessments will be reflected in their quarterly property-tax bills.
What they are finding out and what Princeton homeowners should bear in mind as 2008 approaches is that a reassessment does not automatically translate into a higher property-tax bill. In fact, all things being equal, it will usually result in only a modest change a slight increase, or even a slight decrease in an individual homeowner’s property tax liability.
Here’s why:
When a town goes through a revaluation, every property is reassessed at its current market value. In the Princetons, the market value of the average house in 2008 will probably be somewhere in the neighborhood of $700,000 to $850,000 what the homes would actually sell for compared to the average assessed value today, based on the last revaluation in 1996, of $347,375 in the borough and $424,038 in the township.
The municipal tax rate is determined by dividing the amount of money a town needs to raise in property taxes by the total value of all the property in town. If, after revaluation, the total value of all property in town has doubled, and the amount the town needs to raise in property taxes is essentially unchanged, the tax rate will be cut in half and the owner of a home whose value has doubled will pay about the same after revaluation as before.
Of course, every property has different characteristics age, size, location, condition that affects its value. Some properties that have become more desirable since the last revaluation will experience an above-average increase in value, while others will show a below-average increase. In that case, the owners of the more desirable (and therefore higher-assessed) properties will see their taxes go up in some cases substantially while those whose properties have not kept pace with the average rate of growth in value will actually pay less.
Complicating all this is the fact that residential properties aren’t the only ones that are reassessed in a revaluation. Commercial, office and other business properties are, as well. And if the values of those properties have not risen as rapidly as residential properties, the businesses will get a disproportionate tax break, while homeowners will be hit harder. That’s what happened in Plainsboro and could, theoretically, happen in one or both of the Princetons.
Regardless of how a revaluation plays out, however, the end result is a much fairer distribution of the property-tax burden than a system based on assessments that are woefully out of date. Right now, Princetonians are paying taxes based on what their properties were worth 10 years ago. That means a windfall for some property owners and an excessive burden for others.
From an individual property owner’s perspective, we understand why the outcome of a revaluation may be something to be feared. But, from a public-policy perspective, it is, in our view, a process that should be welcomed.