What Do Property Values Have to do with Taxes?

Properties are appraised so that the costs of schools, and fire protection, and other public benefits are borne in proportion to the amount of money our individual properties are worth.

What is Full & True Value?

Finding the full and true value of your property involves estimating the price most people would pay for it in its present condition.  It's not quite that simple, however, because the assessor has to find what this value would be for every property, no matter how big or small.  But the assessor's job doesn't stop there.  Each year it has to be done all over again, because the market value of almost everything changes from one year to the next.

How Property is Appraised

The assessor's office first reviews all the property to be assessed, then values it. Accurate appraisals require constant research and digging for significant facts to accumulate and analyze in order to estimate the full and true (fair market) value of your property.  To find the value of any piece of property, the assessor must first know what properties similar to it are selling for, what it would cost to replace it, how much it takes to operate and keep it in repair, what rent it may earn, and many other facts affecting its value, such as the current rate of interest charged for borrowing the money to buy or build properties like yours.  Using these facts, the assessor can interpret the property value in three different ways as explained below.

Sales Comparison Approach

The first and most commonly used method compares your property to others that have sold recently.  These prices, however, must be analyzed very carefully to get the true picture.  One property may have sold for more than it was really worth because the buyer was in a hurry and would pay any price.  Another may have sold for less money than it was actually worth because the owner needed cash right away.  Perhaps the property was sold to the first person to make an offer.  When using the sales comparison approach, the assessor must always consider such overpricing or underpricing and analyze many sales to arrive at a fair valuation for your property.  Size, quality, condition, location, and time of sale are also important factors to consider.

Cost Approach

A second way to value your property is based on how much money it would take, at current material and labor costs, to replace your property with one similar in utility.  If your property is not new, the assessor must also estimate depreciation of the structures and how much a lot like yours would be worth if it were vacant.

Income Approach

The third way is to evaluate how much income your property would produce if it were rented as an apartment house, a store, or a warehouse. The assessor must consider operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on your type of property.

Why Assessed Values May Change from Year to Year

When market value changes, naturally so does assessed value.  For instance, if you were to add a garage to your home, the assessed value would increase.  However, if your property came to be in poor repair, the assessed value would decrease.  The assessor has not created the value.  People create value through their transactions in the marketplace.  State law requires your property to be assessed at its full and true value each and every year.  The assessor has the legal responsibility to study those transactions and appraise your property accordingly.  Values change in the marketplace, whether improvements are made to property or not.

Assessed Value & the Mill Rate

The assessor's office does not control the total amount of taxes collected.  The assessor's primary responsibility is to find the full and true value (fair market value) of your property, so that you may pay only your fair share of the tax burden.  A tax rate applied to your property’s assessed value determines the amount of tax you pay.  The tax rate is determined by the Borough Assembly.

Public Information

The assessor's office also keeps track of property ownership, maintains maps of parcel boundaries, keeps descriptions of building and property characteristics up to date, and keeps track of individuals and properties eligible for exemptions.

Property Tax Relief

Several programs exist to provide property tax relief to selected groups of property owners, such as property owners over 65 years of age or disabled veterans with a 50% or greater service connected disability.  Please contact the assessment office for more detailed information and application forms for these programs.

What are Your Rights and Responsibilities?

If your opinion of the value of your property differs from the Assessor’s, go to the Assessment office and discuss the matter with staff.  Staff will be glad to answer your questions about the appraisal and explain how to appeal if you cannot come to an agreement.  The assessor’s office relies on the property owner for information. You can help by providing them with up-to-date and accurate information.

Thanks to the International Association of Assessing Officers for their permission to adapt copyrighted material for use by: