Ben Franklin famously said, ‘in this world nothing can be said to be certain, except death and taxes.’ We can’t help you with the first, but there are definitely ways to alleviate the pain of taxes when it comes to home ownership. In response to the concern among community members over South Orange and Maplewood’s recent real estate tax revaluation, the Vanessa Pollock team pulled together a range of local experts and town leadership in an effort to provide resources and information on how to make sure you’re not paying more in taxes than you should be. If you weren’t able to attend that event, here is an overview and a few key take aways.
The evening started with a clarification by Mayor De Luca that tax revaluations are mandated by the County of Essex, and not at the whim of local leadership. The purpose of a tax revaluation is to appraise all property at the value it would sell for in a fair and bona fide sale – not a short sale, not between family members. The goal of a revaluation is to equitably split the tax burden between homes and neighborhoods. In our community, many houses will have an increased assessment but that does NOT necessarily mean that their burden of the taxes will increase. Why? Because a tax revaluation is not meant to increase revenue, it’s meant to spread the expenses more equitably. Once the township knows its budget, it then divides that number by the new total assessed value of homes. Here’s the formula:
Amount Raised from Property Taxes ÷Total Assessments = Tax Rate
So – and this part is important – the tax rate from year to year is not the same, and we don’t know that rate until about February or March of each year, so what you see on your assessment paperwork this fall is just an estimate of your new taxes, not the official number you will pay next year.
So what can you do if you feel like your home was incorrectly assessed? The first thing to look at is the factual information of your home. Did they correctly count your bedrooms and bathrooms? Do you have a finished basement? Garage? Pool? Is square footage accurate? Interestingly, square footage is measured externally and should include all above grade heated living areas. The next step is not to look at your neighbors’ assessed values, but rather, to look at comparable sales in the area to show market value. For comps, the date of valuation should be between October 1st of prior year and October 1st of the current year. Need comps for your home? Call us! And remember, the assessors are not held to a 100% standard so to have a strong case there should be a big discrepancy. You can then present your case in an informal hearing to Appraisal Systems Incorporated, and if not the issue is not resolved you must then file a tax appeal with the County Board of Taxation by May 1st.
What if your home was correctly assessed but now your wallet is feeling a bit stretched? Justin Messing from Eagle Home Mortgages was on hand to discuss refinancing as a method of reducing your monthly expenses. Though rates increased post-election, we are still at a historically low point with rates. If you bought your home a few years ago or haven’t refinanced in a while, you might want to consider doing so now. Remember, on a conventional 30 year mortgage, your monthly payments remain the same but the share of principal vs. interest is what changes over time. If you’re refinancing after a few years of paying off a mortgage, you’re doing so with a lower principal and so there’s a savings opportunity there. Another option to consider if you know you won’t be in the home much longer is to consider an ARM (adjustable rate mortgage). If your kids are graduating soon or you’re retiring and you’ll be moving in 3 years, consider a 5/1 or 7/1 ARM to lock in a rate that is typically even lower than a 30 year conventional. This means your rate will stay the same for 5 or 7 years, and increase a variable amount once a year thereafter.
Live in new construction? No you don’t, this is SOMA! Most of the homes in our community are almost a hundred years old which means they probably don’t have insulation. Not only does this make for cold toes in the winter, it means you’re likely spending more to heat your home. Consider having an energy audit so you can see where you’re losing most of your home’s heat and where your home is operating inefficiently. If the audit proves there is opportunity to get a significant reduction in energy usage, then through a New Jersey state program you can get an interest free loan of up to $10,000 and a rebate of up to $4,000 to perform energy savings work. Something worth considering if you’ll be in your home for a few years.
Finally, we at the Vanessa Pollock team want people to be happy in their homes, and the ultimate goal of this event was to help people figure out how to afford to do so despite rising property taxes. But if it seems like now would be a good time to sell your home, consider working with a stager to get things looking their best. We love working with Leah Gomberg to get our listings market ready and want to share some of her tips. Get rid of clutter! Clean and then clean again to get rid of anything that may distract a potential buyer from the beauty of your home. If you have wall to wall carpet, thank it for the many years of protecting your wood floors and then put it out on the curb! Paint your walls in calm, neutral colors and even embrace the many shades of grey today’s buyer loves.
We’re here for all your real estate needs and questions, so let us know how we can help you!
Written by, Kelly Lombardi, VP Team Sales Agent