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.

Posted by Lori Turoff | Currently 11 Comments »

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