Marc Pfeiffer, associate director at the Center for Urban Policy Research at the Edward J. Bloustein School of Planning and Public Policy, has updated his online guide to property taxes across the state of New Jersey.
The guide, titled “New Jersey Homeowner’s Guide to Property Taxes,” was initially created in 2018 as a partnership between The New Jersey Society of Certified Public Accountants (NJCPA), New Jersey Realtors and also the Association of Municipal Assessors of New Jersey. It aims to help New Jersey residents understand how property taxes work, how their homes are assessed, and what relief programs are available for qualifying homeowners.
“We decided, okay, let’s do a handbook for folks, because there really isn’t anything out there that a state agency has produced or local government organization has produced that tells homeowners, ‘here’s how property taxes work,'” Pfeiffer said when asked about his inspiration for writing the guide.
The guide helps homeowners understand the payment process. Key takeaways include how tax is calculated, important payment deadlines, and the results of missing a payment.
Many New Jersey homeowners are surprised by the size of their property tax bills, Pfeiffer explained. “(Homeowners) don’t necessarily understand two things: that it’s based on their assessed property value … (and) while they’re paying the municipality all that money, the municipality gets a relatively small part of it,” he said.
Pfeiffer noted that within a given municipality, the tax rate is the same for everyone but bills differ because assessed property values differ. According to the guide, assessed property values are intended to reflect what a “willing buyer would pay a willing seller” for a given property.
The guide explains that it is often more efficient for municipalities to calculate what the current real estate market will bear. Assessments can change for a variety of reasons, such as new construction, a successful appeal by a homeowner, and regular, town-wide reassessments.
The guide highlights how property tax bills reveal where the tax money goes. Generally, public schools receive approximately 50 percent, then the municipal government receives anywhere from 20 to 30 percent. Finally, the county government receives the remainder. Some municipalities have additional taxes for open space and services, such as a fire district or public library.
In addition, New Jersey is known for its high property taxes. Pfeiffer explained that this is due to several factors, including the state’s dense population and aging infrastructure. Organized labor also advocates for middle-income salaries for construction workers and teachers, which raises personnel costs for government agencies, including salaries, benefits and health insurance.
Within the state, each municipality has different property tax rates due to varying overall property values and budgetary needs. Businesses and homeowners within a municipality pay the same tax rate, but since businesses usually have higher property values, they pay a larger share of the tax bill. Homeowners in towns with offices and factories often pay less in property taxes.
To help offset property tax costs, New Jersey offers several relief programs that provide rebates or credits to eligible residents. Two of the primary programs include the ANCHOR program, which provides income-based rebates, as well as the Stay NJ program, which aims to reduce property tax burdens for eligible senior citizens. Additional programs provide benefits to senior citizens and veterans.
Funding for these programs largely comes from New Jersey’s income tax revenue, which is constitutionally dedicated to property tax relief and school funding. “The state has been working on consolidating the applications to make it simpler for people to apply. And I think the Stay NJ program is a good first effort to try to do that,” Pfeiffer said.
Homeowners who think their property is overvalued can file an appeal with their municipal assessor. If unsatisfied, they can take their case to the county tax board for a hearing and possible adjustment. Pfeiffer noted that appeals usually focus on if a property was assessed at a higher value than similar properties in the area. “When somebody appeals their taxes … they’re really appealing their property value,” he said.
Although many Rutgers students do not currently pay property taxes, Pfeiffer said understanding the system is still important. Students who plan to buy homes in the future will need to account for property taxes in addition to mortgage payments, he said. He also discussed how property taxes can affect renters, as landlords often pass those costs on to tenants through higher monthly rent.
“If you are a renter in downtown New Brunswick … somebody is paying property taxes in some way on the property you live,” Pfeiffer said. “Your rent is going to include some portion of the property tax bill so the homeowners can pay it.”
Pfeiffer added that understanding property taxes empowers residents to make informed choices as voters and community members. He advised potential voters to stay aware of and consistently be able to comprehend the tax process, as it is part of what elected officials frequently make decisions about.