Garwood NJ Tax Reassessment
Phillip CostaPro Member
Rental Property Investor · Poconos, PA · Member since 2018 · 32 posts · 17 votesHey BP community,
I am looking into small multifamily properties in Garwood, NJ in Union County and was wondering what is happening with the new tax assessment for the area. How does it work? Why is there a reassessment? What can you expect from it? How should one plan for it?
@Phillip Costa - Tax assessment 101: the current owner gets a notice from the town that a third party is going to come by to inspect the home within a date range. It is your choice to let them in or not for an interior inspection. If they cannot see the inside, they will make assumptions based on anything they can see in windows, online, or a recent house sale price. If you do not let them in, you lose your right to appeal your tax assessment with the town. After the guy came and didn’t see inside, we got a stickie that said to call and they will reschedule a tour. When we didn’t, our house was assessed at about what it was during the previous cycle. (191k). We had bought it for 180k about 12 months before the reassessment. Our taxes actually went down $700 because the other values in the town went UP.
For our other property we let them in to our foreclosure before we redid the flooring. It took 10-15 minutes and the guy measured the outside of our house. I don’t remember if they took interior photos but probably. Our taxes went down a little maybe $500.
Each year as the budget changes and the town appreciates, they can modify your tax assessment.
When I was talking to the tax lady immediately after purchase about getting a lower valuation because I paid 180k on a 191k assessed house, she said they don’t really consider unless it’s 10-15% off. On a $7000 bill, even saving 6% would have been hundreds back in my pocket but she told me they didn’t do it. Probably helpful on the flip side that they don’t automatically jump your taxes based on purchasing at a price above the assessment either.
Hey man, I'm in Rahway NJ. Reassessments happen for a couple reasons. It can happen when its been a long time since the last reassessment or when property values have increased significantly. Either way, knowing the state of NJ, you should prepare for an increase. Towns aren't doing it to lose money and Garwood is a hot little town in between Cranford and Westfield. There are even rumors that they might split Garwood between those two towns.
I would try to manually calculate what the taxes might be. I would use your anticipated purchase price and reverse engineer the assessment value and then use that value to get the annual taxes. That would be your worse case scenario. Its a complicated formula that I can help you with if you need PM me.
@Phillip Costa
You can’t really determine what your tax will finally be. NJ does an “ad valorem” system, which many other states do. Quick summary:
Think of it like a balance sheet. On one side, the town needs so much funds per year to operate. On the other side is the tax roll to cover the expenses. So how to fairly tax everybody???
The sum of all the assessed values in the town is the “ratables.” So whatever percentage of the ratables to meet the town’s expenses is the tax rate.
So... if everybody’s assessments double, then the tax rate halves. The issue is in a complete reassessment, some properties go up some, and some properties go down some. This occurs all by different amounts. The key is to have your property somehow go up “less than your neighbor.” You are trying to pay (be taxed) a smaller piece of the pie than your “neighbor.”
Legally, all the towns are supposed to update their assessments every year. Costs and workload reasons, the last major assessment might have been the last crash. Some towns the Assessor does a overall increase in accordance with the overall change in the property values in the town every year. Then every few years a complete reassessment it done
In case you are wondering, at the County level, they apportion the “fair share” by town by applying a ratio that is determiende each year showing how much the local assessors are “behind.”
Hope this helps...
Regarding reassessments in NJ, nothing really needed to plan for it. They usually happen every few years. City hires a 3rd party to visit every property to verify details. See link for a description of a typical process: https://patch.com/new-jersey/w... In the end, your taxes may go up or down. You can also appeal if you disagree with your new assessment.
@Phillip Costa - Tax assessment 101: the current owner gets a notice from the town that a third party is going to come by to inspect the home within a date range. It is your choice to let them in or not for an interior inspection. If they cannot see the inside, they will make assumptions based on anything they can see in windows, online, or a recent house sale price. If you do not let them in, you lose your right to appeal your tax assessment with the town. After the guy came and didn’t see inside, we got a stickie that said to call and they will reschedule a tour. When we didn’t, our house was assessed at about what it was during the previous cycle. (191k). We had bought it for 180k about 12 months before the reassessment. Our taxes actually went down $700 because the other values in the town went UP.
For our other property we let them in to our foreclosure before we redid the flooring. It took 10-15 minutes and the guy measured the outside of our house. I don’t remember if they took interior photos but probably. Our taxes went down a little maybe $500.
Each year as the budget changes and the town appreciates, they can modify your tax assessment.
When I was talking to the tax lady immediately after purchase about getting a lower valuation because I paid 180k on a 191k assessed house, she said they don’t really consider unless it’s 10-15% off. On a $7000 bill, even saving 6% would have been hundreds back in my pocket but she told me they didn’t do it. Probably helpful on the flip side that they don’t automatically jump your taxes based on purchasing at a price above the assessment either.