What is an added tax assessment?
When a new building is completed or physical alterations are made to an existing building during a calendar year, a tax assessor is entitled to increase the tax assessment mid-year by making an “added assessment” against the property. The added assessment is made effective the month following the completion of the construction.
For example, if a property owner obtains a certificate of occupancy for a 10,000 square foot addition to a building on May 15, the tax assessor can increase the tax assessment effective the following month on June 1.
How is an added assessment determined?
The tax assessor will determine the value of the entire property, including the new construction, once the construction is completed. It is important to note that the starting point is a new valuation of the entire property, not just the new construction. The added assessment will be the difference between the newly determined value and the original tax assessment.
For example, assume a building is assessed at $400,000 in a town with a common ratio of 100% (where all properties are assessed at 100% of their fair market value). The property owner spends $100,000 on an addition to the property. When the construction is done, the tax assessor inspects the entire property and determines the fair market value to be $700,000. The added assessment will be $300,000 (not $100,000), pro-rated for the balance of the year.
Will an added assessment increase my real estate taxes?
Generally, yes. However, if your original assessment was high to start with, the improvements may not increase the overall assessment.
When and how will I find out about an added tax assessment?
Each municipal tax assessor is required to file a list of added assessments with the County Tax Board by October 1 of each year. Once the list is filed with the County, a notice is sent to each property owner subject to an added assessment.
When are the taxes arising from the added assessment due?
The taxes arising from the added assessment are due on November 1 of the year of the assessment. Note there is a short time period between the date you receive notice of the added assessment and the date the additional taxes are due (less than 30 days notice in most cases).
How do I challenge an added assessment?
You are required to file a tax appeal by December 1 of the year of the added tax assessment, or 30 days from the date the tax collector completes the bulk mailing of the tax bills, whichever is later.
If I plan on doing a major renovation or addition to my property, can I do anything to plan for the added assessment?
The answer is yes. First, it is important to quantify your exposure as early as possible. You will need to evaluate your current tax assessment to determine if it is correct, high or low. Remember, if the original tax assessment is low, you have additional exposure as the assessor can use the added assessment to “catch up” and correct the old low assessment. Second, by quantifying your exposure, you can plan for payment. Finally, you need to contact qualified professionals (lawyer and appraiser) to help you evaluate the merits of an appeal or assist in negotiating with the tax assessor.
Contact a Tax Assessment Lawyer
If you have any questions or wish to appeal an added assessment, it is important to assemble a qualified team consisting of a lawyer, and most often, an appraisal. If you have any questions, please feel free to contact Real Estate Tax Appeal attorneys.
