History
of Local Property Tax
The
New Jersey State Constitution adopted in 1947 provides that "property
shall be assessed for taxation under general law and by uniform rules. All
real property assessed and taxed locally or by the State for allotment and
payment of taxing districts shall be assessed according to the same standard
of value, except as otherwise permitted herein, and such property shall be
taxed at the general tax rate of the taxing district in which the property
is situated, for the use of such taxing district" (Article VIII, Section
I).
A long period of legislative history has developed numerous exemptions and various special property tax treatments (i.e., farmland assessment). These are found principally in R.S. 54:4- 3.3, RS 54:4-3.6 and RS 54: 4-23.1. Generally exempt are government-owned property, and property of religious, educational, charitable and various types of nonprofit organizations. In addition, qualified veterans and disabled persons, senior citizens and their surviving spouses are permitted tax deductions of $250 and $250, respectively.
An ad valorem tax -- The local property tax is measured by property values and is apportioned among taxpayers according to the assessed value of taxable property owned by each taxpayer. The tax applies to real estate and tangible personal property of telephone, telegraph and messenger systems companies.
A local tax -- The property tax is a local tax assessed and collected by municipalities for the support of municipal and county governments and local school districts. No part of it is used for support of State government.
Amount of Tax (a residual tax) -- The amount of local property tax is determined each year, in each municipality, to supply whatever revenue is required to meet budgeted expenditures not covered by money available from all other sources. School districts and counties notify municipalities of their property tax Municipalities add their own requirements and levy taxes to raise the entire amount. As a residual local tax, the total property tax is determined by local budgets and not by property valuations or tax rates.
Property assessment (the tax base) -- All taxable property is assessed (valued for taxation) by local assessors in each municipality. Assessments are expressed in terms of "taxable value," except for qualified farmland, which is valued based on its agricultural/horticultural use and productivity.
Rate -- The local property tax rate is determined each year by the County Board of Taxation for each municipality by relating the total amount of tax levy to the total of all assessed valuations taxable. Expressed in $1 per $100 of taxable assessed value, the tax rate is a multiplier for use in determining the amount of tax levied upon each property.
Disposition of Revenues -- This tax is assessed and collected locally by the taxing districts for support of county and municipal governments and local school district purposes.
Each
year the Division publishes a Table of Equalized Valuations showing the average
ratio or assessed value to true value of real estate in each of the 566 local
taxing districts. This table is certified to the State Commissioner of Education
pursuant to Chapter 86, Laws of 1954
(N.J.S.A.54:1-35.1) for use in calculating and distributing State School aid.
Equalized valuations are also the basis for apportioning county taxes among
local taxing districts and for apportioning the tax cost for a large number
of regional school districts among component taxing districts. Equalized valuations
are also the basis for measuring debt limits for local governmental units.
The ratio of assessed valuation to sales price is calculated for each usable sale and all are classified into four groups( vacant land, residential, farm, other i.e. commercial, industrial and apartments). An overall district average weighted ratio is calculated for all classes as a weighted average of separate ratios calculated for each class. This district weighted ratio is applied against assessed value of the district to determine aggregate "true value."
"True value is averaged with true value for the preceding year after adjustment for "added and omitted assessments." This averaging has the two-way advantage of avoiding abrupt changes in ratio from year to year and avoiding undue influence of inadequate samples of sales for a single year.
If you would like a copy of the above publication, contact Local Property Branch at (609)292-7929.
Chapter 123, Laws of 1973, as amended by Chapter 51, P.L. 1979 concerns tax appeals and establishes "common level ranges" for use on appeals in cases of alleged discrimination. The amendment changed the definition of average ratio from an unweighted, unclassified arithmetic average to the average ratio as determined by the Director for State School Aid.
The "common level range" for each district is defined by taking 15% of the ratio and deducting from the ratio for the lower limit and adding to the ratio for the upper limit.
If you would like a copy of the Chapter 123 Assessment Limits, please contact Local Property Branch at (609)292-7929.
This publication lists sales of Class 4 (Commercial, Industrial and Apartments) Property both usable and non-usable sales within the last sampling period used for the Director's Table of Equalized Valuations.
If you would like a copy of the Sales Categorization of Class 4 Property, please contact Local Property Branch at (609)292-7929.
The Real Property Appraisal Manual for New Jersey Assessors (Vol. I and II) is one of the tools used by assessors in the appraisal process to determine assessed value.
If you would like to purchase this Manual, please call (609) 292-7929.