UN Blog: To all math genuises out there. How would you simplify the following statement? and IMG_1585

Wednesday, October 30, 2013

To all math genuises out there. How would you simplify the following statement? and IMG_1585_1600x1067

To all math genuises out there. How would you simplify the following statement?

"...whenever the county board of taxation finds that the ratio of assessed value to true value of property under appeal exceeds the upper limit or falls below the lower limit by 15% of the average ratio for each municipality, the county board of taxation shall revise the assessment by applying the average ratio to the true value of the property."

I am really lost. HELP! Please explain like you would to an 8-year old. Thanks!

Taxation best answer:

Answer by subwus
As far as what you have in quotes is concerned, it is in relation to appealing against tax bureacracy property assessments in NJ.

So, what we are going to do, is pretend that I am part of a county board of taxation in NJ deciding on your appeal against the assessment of your property. I am going to explain the numbers.
Your property has been assessed for taxation purposes, at say $ 250,000
But you say it is has a true value of $ 200,000 and that has been accepted by the court.

First thing we do is divide the assessed value by the true value, we get a number the tax bureaucrats call an 'assessment ratio'.
250,000 ÷ 200,000 = 1.25
Multiply that ratio by 100 and it turns into a percentage value.
So 100 x 1.25 = 125, or 125%

Now then, we need to know what county and municipality the property is in. Then we look at the website of the NJ Division of Taxation to find out the 'average ratio' of your area.
The link is below. A table of NJ counties under the heading 'Common Level Ranges (Chapter 123)'
Select and click on the county for the year you need.

For one example, lets say you live in Atlantic City in Atlantic County.
It says for 2013 that the 'average ratio' is 120.39, the Director of the Division of Taxation decides what the 'average ratios' are.
Take 15% of the value of the 'average ratio'. 15% of 120.39 is 18.06
Add this number to the average ratio to get the upper limit, subtract this number from the average ratio to get the lower limit.
The 'average ratio' in different municipalities are different. But it is presumed that the 'average ratio' for a whole county is 100, or 100%
Now then, if the 'average ratio' and the assessment ratio, are both above the 'average ratio' for the county of 100, by law your property gets reassessed to its true lower taxable value of $ 200,000
That's it. No need to refer to the upper and lower limits.

Example two, lets say you are now in Longport Boro in Atlantic County. Look up the 'average ratio', it says 91.27%
Now look at the upper limit. It says 104.96%
But your assessment ratio is 125%, it exceeds the upper limit.
So, by law your assessment gets changed. The 'average ratio' is 91.27%. Now then, 91.27% of the true value of $ 200,000 is $ 182,540. The taxable value of your property gets reassessed to $ 182,540

Example three, lets say the tax bureaucracy assesses your property at $ 150,000
But you still want it to be assessed on its true value of $ 200,000
Get the assessment ratio by dividing the assessed value by the true value.
150,000 ÷ 200,000 = 0.75
Multiply by 100 to turn that number into a percentage.
0.75 x 100 = 75%
Have a look at the limits for Longport Boro again. The lower limit is 77.58%
Your assessment ratio is below the lower limit.
So, again, by law your assessment gets changed. The 'average ratio' is 91.27%
Now then, 91.27% of the true value of $ 200,000 is $ 182,540. The taxable value of your property gets reassessed to $ 182,540
That is the same amount as in the previous example. Only this time the reassessed taxable value has gone up to that amount rather than down to it.