Does a refinance trigger a tax assessment?

[Ian Livaich]

Hello all,

I am currently negotiating with a bank on a REO over my first property. It is a triplex in New Jersey. This would be a BRRR deal. My question is this -- does a refinance trigger a tax assessment by the town?

The property next door is identical but is a single family home with two less bedrooms. After it was flipped and sold last year, its assessed value shot up $90,000, causing an increase of $4,000 annual taxes. So, I am assuming that a sale of a property triggers a new tax assessment by the town. Please let me know if that is an accurate assumption.

So, I then thought if a refinance triggers a tax assessment as well, our potential property, which would likely appraise at the same price as the house next door, causing a tax increase at a similar level and destroying cash flow and ROI post refi. If this is not the case for the next few years, the cash flow and ROI make this a home run deal. I understand that the town will eventually re-assess.

Two follow up questions

(1) If the town does not re-assess on a refi, does it just assess based on its pre-determined schedule for assessing properties?

(2) Does pulling permits for rehab trigger a tax assessment? The property mainly needs roof and HVAC work.

Thanks for your input,

Ian

(Note: I posted this in the Creative Financing forum but soon realized that this would be a more appropriate forum)

[Jessica Zolotorofe]

The assessments in NJ are as of October 1 the year prior, so if anything, even a sale wouldn't have any impact until the following October. That being said, NJ is a very lazy state and nearly never revals unless there is an appeal or a mandated revaluation from the county of state. I believer Cherry Hill did a full reassessment mandated by the county in 2012 or 2013 so they'll probably ignore it now for years unless there's an appeal filed. That being said, a refi they wouldn't even know about really. A sale, they would base a revaluation on if they did one, but the likelihood of it "triggering" a reval in a NJ municipality is not great. Municipal laziness actually works in our favor for once! :)