2008 Dec 8th

Hoboken Property Tax Increase – What it Means

The Low Down on the Hoboken Property Tax Increase

I’ve been asked a lot of questions about this lately so I thought it worth a post.  There’s been plenty of news about the recent tax increase on real estate.  The papers tend to talk about a 47% increase but that’s not really accurate.  If your taxes are paid by your mortgage lender you might want to call them to be sure they’ve got it right.  Here are the facts as far as I know:

1.  Your Hoboken property tax bill is comprised of different parts.

2.  The increase is 47% but it applies only to the City of Hoboken portion of the total tax bill.

3.  If you compare the increase against your total bill, it is more like 20%.  Different people have been calculating this differently because the actual bills are incredibly confusing.

4.  Judy Tripodi been apppointed by the State of NJ to take over running the city’s finances.

5.  The tax was enacted because Hoboken has a $10 million budget deficit – how and why that happened is not the subject of this post.  You can read about that at NJ.com and HobokenX.com.

6.  The increase is intended to allow the city to continue operating.

7.  It is supposed to apply to only the 1st and 2nd fiscal quarters of 2009.

8.  Few Hoboken residents believe that.

If you are thinking about buying a condo in Hoboken here is what you should consider:

If the condo is brand new construction or a gut renovation of an existing structure, the taxes you pay should be based on the sales price of the unit you buy.

The tax increase should not affect you – at least not at this time.  That does not protect you from any future tax increases after you close on the property.

If the condo is not new construction a tax rate has already been determined by the city.  Tax records are public and available on line.   If you are working with a realtor and the property is listed on the MLS the MLS listing contains a tax figure.  That figure is taken off the tax records and typically reflects the last full year’s tax liability since that is what is on the tax records.  So it likely does NOT include the increase.  Therefore you should be sure to ask and, if moving forward and making an offer on a condo, request that the seller provide you with copies of the most recent 2 tax bills. They were sent out weeks ago. If they don’t have them, they can get a copy from city hall tax assesors office.

I think it is safe to assume, given the financial state in which Hoboken finds itself, that the increase may not be temporary.  So you might be wise to base your affordability calculations on the higher number when plugging in a tax figure.

If you are buying a property and thinking of doing renovations, your taxes will be affected.  When you get a building permit, the Hoboken building department  notifies the Hoboken tax assessors office.  When the work is completed, the tax assessor will come inspect your property and adjust your assessed value to reflect the improved value of your property and your taxes will likely increase.

There has also been talk in the media about a city wide tax re-evaluation in Hoboken.  That would mean that every property would be reassessed and the taxes adjusted to reflect the new assessment.  In a nutshell, there are many old brownstones and multifamily buildings that have a tax bill based on a very old assessment number.  The owners of these properties are paying relatively low property taxes.  In contrast, homeowners who purchased properties, especially newly constructed condos sold during the height of the market, have their taxes based on the high sales price they paid in ’05 or ’06.  Their tax bills are relatively high.  The idea is to equalize the tax burden so that everyone is paying based on the current value of his or her property.  So, for example, let’s say an owner of 30+ years of a 10 unit rental building on Willow was assessed way back when for $900,000.  Let’s say the owner of a gut renovated condo unit, just one 2 bedroom unit, in a very similar building right next door might be paying taxes based on a purchase price of something near $500,000.  The result is not quite an equitable situation.

The part I can’t quite wrap my head around is how is it that in the 10 years I’ve lived in Hoboken there has been so much construction and such a plethora of new condo units put on the market, the owners of which all must pay property taxes at relatively high rates and yet – even with PILOT programs, we’re not awash in revenues?

If anyone has more info or details on this mess, please email me and I will post a follow up.

FacebookTwitterGoogle+Share
  1. DKzzzz

    Thank you for posting this. I was wondering what taxes would do to the overall cost of living in Hoboken.

    On a side note: I wonder how many people file a construction permit when they do kitchen or bathroom or floor renovations in their apartments? I certainly would not pay a dime to Hoboken for putting new floors in my place. This asinine idea of taxing home improvement came during the times when Real Estate was viewed as a money pump and every home owner was a potential market speculator. Such backwards laws make my blood boil.

  2. Heidi Sprang

    Hi Lori. Thanks for writing this post. I’ve been reading the news but that still clarifies a lot. But a couple questions – I’ve read that the increase could be temporary (though I appreciate the sceptism around that) and should affect Q1 and Q2 2009. However the recent tax bills sent out – at least the one on my unit – were for Q3 and Q4 2008. But it included a huge increase over the previous quarters (around 37%). Is this the same thing?

    The other thing was regarding a potential reevaluation. I’ve got to say this seems like a very sensible idea. I know when I looked at units in Hoboken – all 2 BR places within a $60k or so price range – the taxes still varied from $6000 to $10000. Which does seem really unfair – if my neighbor and I both have a unit purchased in 2008 for X dollars, why should one person be paying $3000 more in taxes? That said, my question is – if they do a reevaluation, what would the expected outcome be? Will some peoples taxes go up and others down? Or will only the low paying people go up? Or would that enable the city to truely reverse the 47% increase?

    I do hope the city manages to sort their finances out. It’s quite appalling that this has all come at a time where the housing market and the economy in general are putting pressure on people – it’s like kicking the residents of the town while they’re down. And I’d hate for this kind of news to deter people from moving to the area in the future.

  3. Lori

    Hi DKzzz,
    Thanks – I’m glad my info was helpful. As to your other point, as I understand it, you only need a permit if you are doing plumbing or electrical work. Putting down a new floor would probably not be included but – you never know what to expect from Hoboken’s building department. If you do construction in Hoboken without permits and the city finds out they can make you rip everything out. I’ve heard stories of neighbors snitching on each other. I know the building department has inspectors that walk around the city looking for ‘building materials’ or debris and issue summonses and stop work orders.

    I agree that it can be infuriating especially since it is so difficult for ordinary citizens to figure out how to do work on their own properties without problems with City Hall.

    There are quite a few posts on Hoboken411.com about the building department experience.

  4. Lori

    Hi Heidi,
    In answer to your question – yes, the bill you mention is what this post is about. I don’t fully understand how city hall writes tax bills but if you look at my links to the posts on H411 on the subject, there are some pretty detailed explanations there in the comments. I believe they made it confusing on purpose.

    Regarding a reval (as it’s called) who knows what the result would be. In common sense terms, you would think that the older properties that have not had an assessment in many years (at least 10) would see an increase. Think about it. If you bought a property 10 years ago, all real estate values in Hoboken were much, much lower. You could buy a brownstone for $500K back then. So the assessed value on those properties should be too low and would be raised. If you bought new construction at the height of the market you might see a decrease but does anyone know of taxes going down in the midst of a financial crisis at the city, county, state and federal level? I would not bet on it. No one knows for sure if and when there will be a reval and what the results will be. We do know the city is having a budget crisis, someone has to pay for it and it’s likely to be us – the taxpayers. Sounds familiar, no?

  5. FAP

    With respect I think you are mistaken. The Tax bill is made up of Municpal, School, and County taxes. The Hoboken Municipal bill is going up around 70% to 100% (I’m at work so don’t have my numbers) which is rasing the the Total tax bill (all three portions combined) 47%.

    So if you paid 6K in total last year total you should expect to pay 9K for FY09.

    Yes it is that bad.

  6. FAP

    Here’s a decent run down for the tax hike

    http://www.nj.com/hobokennow/index.ssf/2008/10/city_council_followup_does_it.html

    In short Mayor Roberts has spent every new dollar from construction and then some. He’s also borrowed against the future sale of the muni-parking gargage to the point we’ll be lucky to NET anything for it.

    Dave Roberts also hid expenses he was semi-legally trying to push into future fiscal years. He was so late in payments that the municipal insurance plane was almost cancled by our insurer!

    Not to mention Roberts’ administration makes sweetheart deals with developers and then “misplaces” the agreements so we don’t have any method to enforce the terms of the agree that benifit the city. At the last City COuncil meeting Fred Bado, director of commuity affairs, said he couldn’t find OVER 85% of PIOLT (Payment In Lieu Of Taxes) contracts!

    Mayor Dave Roberts and his administration have greatly overspent the normal revenues, to the tune of over 20 million dollars last year alone, and hid it from both council and citizen alike. It’s only now that the State has come in that we are getting a look at the “real” books.

    And the State Overseer has said that because 70-75% of spending is contractual residents shouldn’t expect to see a dramatic reduction anytime soon.

    The solution to this problem is to vote this may for a Mayor who will treat this city more like a business and the residents less like cows to be milked for their hard earned pay.

    -Forde Prigot

  7. Lori Turoff

    Forde,
    There have been so many different numbers tossed around I am really not sure which are correct. My advice is to learn as much as you can from many different sources. There have been lengthy discussion on many sites and I expect this is just the beginning. What a mess!

  8. Mark

    I’ve been trying to figure out the tax thing as I am currently buying (yes, crazy). To the best of my knowledge (this is based on what someone at the assessor’s office said), the new tax will be 42.94 for every 1,000 of assessed value. This works out to be an approximate 20% increase stemming from a 47% increase in Municipal. So, my information is the same as Lori’s. Again, not sure of the accuracy as there are so many sources saying different things.

  9. Nusias9

    I actually look forward to the day that a city wide tax assessment is implemented. I bought 650K condo with 12K taxes. All the while the 2mil single family brown stone two blocks over from me (according to public record) pays merely $3000 a year in property taxes.

    It’s frustrating to be forced to pay higher taxes (new construction), while more valuable SF brown stone owners skim the system.

    I’d like to know exactly how many of the people protesting own a home that has not been re-assessed in over 15 or 20 years..

  10. REYNALD Deschamps

    CHECK CAFRMAN.COM

  11. Jackie

    And what about these condo’s that were just recently reassessed in 2008? It’s a double hit, bottom line.

Leave a Reply

Copyright © 2008 Hoboken Real Estate News     Login     Sitemap