Homeowners Are Challenging Property-Tax Assessments At A Record Rate

tax-billWith the ebbing of the real estate market, a record-bursting tide of property-tax appeals is inundating assessment offices all over the region – and the nation – with appeal numbers double and triple what they were last year. What is happening locally “is a microcosm of the whole country,” said John Garippa, a New Jersey tax lawyer and president of the American Property Tax Counsel in Chicago. “It’s an incredible, incredible number of appeals.” New Jersey has smashed records for county-level and court filings, he said. Camden County’s 1,260 appeals were triple last year’s. More than 14,000 were filed in Ocean County, and with an April 1 appeal deadline, the county typically wraps up hearings during the summer; this year, they will be lapping into November.

Before the Aug. 1 deadline, more than 5,000 appealed in Bucks County, the most in at least 11 years, and both Chester and Montgomery Counties reported the highest totals since the countywide mass appraisal of more than a decade ago. Delaware County is the exception; its numbers are about the same as last year’s.

In Philadelphia, where the Board of Revision of Taxes is in turmoil, the appeal numbers aren’t yet final. The board said last week that about a thousand appeals had been filed, about half last year’s total. But more were expected before tomorrow’s deadline.

Philadelphia, which has a rolling reassessment and is trying to overhaul its entire system, sent out only 15,000 reassessment notices this year – compared with 413,000 in 2007.

Almost a third of Montgomery County’s came from Lower Merion Township, said Roseanne Weathers, the county Board of Assessment Appeals office manager.

It was hit with so many from the township’s Green Hill Condominium complex that the appeals board has decided to make an unprecedented house call. Board Chairman Dennis Sharkey plans to send an assessor there next week to hold hearings for the primarily elderly residents.

The appeals are part of the fallout from a stubbornly sluggish economy, and that fallout was evident last week in Weathers’ office – covering her desk, piling up on the floor. As have other county boards, Montgomery County’s has been under a state of paper siege.

“It really keeps you busy,” Weathers said on a day when the assessment board was hearing 56 appeals.

The assessment offices are in the recessionary cross-fire because, of all the major levies, real estate is the only one that a taxpayer can fight. Wage, sales, and head taxes are immutable, but a property-tax bill is arguable.

The tax bill is based on the assessment – the portion of market value that is subject to taxation. And if a property owner can demonstrate that the true market value is less than the assessors’ estimate, the tax bill can be lowered.

With property values sagging, the appeals business is surging. It’s not surprising that the Garden State’s appeals would be off the charts, said Jerry Cantrell, president of the New Jersey Taxpayers Association, because the state’s real estate levy is among the nation’s highest. “It hits everybody,” Cantrell said.

If the big driver in New Jersey is the sheer magnitude of the bills, the tax matrix is a tad more complicated in Pennsylvania.

The most aggrieved class of Pennsylvania property owners consists of those who purchased new construction within the last five years, said Jeffrey DiAmico, an attorney representing about 50 appellants in Bucks and Montgomery Counties.

“That’s unfortunately the way the assessment system works,” said Michael Lewis, who is a case in point. Lewis purchased a newly built home in Solebury Township in 2005.

His house was assessed at the top of the market, and by the county’s estimate, it is worth about $1.7 million, yielding an annual tax bill of about $19,000.

Lewis has appealed, saying the house might have lost up to 30 percent of its value as buyers have shied away from pricier properties. “At the higher end, there’s not much of a market,” he said.

Such value plunges – up to 40 percent – are common these days among the priciest residential properties, said Joseph O’Brien, a veteran Delaware County tax lawyer who represents property owners throughout the state.

The recent construction tends to be assessed higher in Pennsylvania, where counties are responsible for affixing the values and are reluctant to conduct costly and politically unpopular mass appraisals to keep assessments up to date.

In New Jersey, assessing is done at the municipal level and mass appraisals occur more frequently.

In Pennsylvania’s countywide system, all county properties must be done simultaneously. The values then are frozen in time until the next reassessment – and that can be quite a wait.

Lewis said he was astounded to learn that Bucks County had not reassessed since 1972. Under such a system, owners of older properties that appreciate get a break over time because their taxes are based on lower values.

Newer homes, however, carry fresher appraisals, closer to 100 percent of current value. It so happens that Lewis bought at the top of the market.

But it’s not just the new; the system works against any property that is depreciating.

And more than Lower Merion’s rising taxes, that steams Harry Epstein, 84, one of the Green Hill owners who have appealed.

Epstein and his wife bought their unit in the City Avenue high-rise in 2003 for $162,500, and by the county’s estimate, it is worth more than $180,000, translating to a tax bill of $2,700. Epstein, who calls himself a “full-time golfer,” begs to differ. “The values have dropped considerably,” he said.

Said Lewis: “I hope, one property at a time, we can convince the state to change this system.” In the meantime, he said, “I’m paying too much, and others are too little.”

Lewis, who said he is between jobs, is among those who have felt the sting of the downturn firsthand.

Carolyn DiMedio of Haddon Heights knows all about the down economy. Her 60-year-old husband runs a building-supply firm, and business is off 70 percent. Still, they must find a way to pay a $24,000-a-year tax bill. The assessor says their house is worth $954,000.

“If I could get $750,000, I would be really happy,” she said. She appealed her bill this year and got a reduction – of $750.

“My husband is going to have to work for the rest of his life,” she said. They plan to look at a development in Delaware.

Tax experts think that with values continuing to fall, the appeals business will continue to rise.

In Norristown, Weathers, the Montgomery County office manager, held up three envelopes on her desk, and observed, “I am getting some in for next year.”

Said Sharkey: “I think next year is going to be worse.” Philly.

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