The New Jersey Legislature adopted a formula known as Chapter 123 in 1973 to test the fairness of an assessment. Once the Tax Board has determined the true market value of a property during an appeal, they are required to automatically compare the true market value to the assessment. If the ratio of the assessment to the true value exceeds the average ratio by 15%, then the assessment is automatically reduced to the common level. However, if the assessment falls within this common level range, no adjustment will be made. If the assessment to true value ratio falls below the common level, the Tax Board is obligated to increase the assessment to the common level. This test assumes that the taxpayer will supply sufficient evidence to the Tax board so that they may determine the true market value of the property subject to the appeal. You should inquire into your district's average ratio before filing a tax appeal. This ratio changes annually on October 1, for use in the subsequent tax year.
Director's Ratio = 85%
Common Level Range = 72.25% to 97.75%
True Value = $95,000
Assessment = $90,000
Ratio = 94.74% ($90,000 ÷ $95,000)
Judgment = No Change