THE TAX ABATEMENT PROCESS
New Hampshire’s tax abatement process puts the burden on proof upon the applicant. In most cases this requires an appraisal report which then becomes the basis for the tax abatement appeal. The tax abatement process can be cumbersome and confusing. As a result, many property owners are reluctant to file a tax abatement application.
Do you need to file for an abatement?
Since most municipalities in New Hampshire do not reassess property each year, the NH Department of Revenue Administration establishes an equalization ratio for every municipality. In order to calculate what the municipality states the property is worth in a given tax year, divide the total assessed value by the equalization ratio.
For example, if the tax assessment card indicates an assessed value of $250,000 and the current equalization ratio is 92% then the equalized assessed value of the property calculates to $230,000 ($250,000 ÷ 0.92). The $230,000 amount is what should be used as a basis for determining whether or not the property is overassessed.
In New Hampshire, there are three reasons to file a tax abatement. They are: 1. Physical data on the tax assessment card is incorrect. 2. Market data for the property shows that the property is overassessed based on the equalized assessed value of the property as of April 1. 3. Disproportionately assessed when compared to other properties within the municipality.
Assessment versus Appraisal?
Municipalities use mass appraisal techniques. Generally speaking, cost and sale data are collected and analyzed. In most cases, market data is collected within the municipality only. Rates are then established for various property types and adjustments are made for specific property characteristics. Mass appraisal techniques are utilized to assesses thousands of parcels in a municipality. In most cases, the end result of the assessment using mass appraisal techniques should be similar to the result of an appraisal.
The appraisal process differs significantly from the assessment process. Rather than collect data and apply it to a large sample of properties in a municipality, the appraisal focuses on one specific property. Cost, sale, and income (if applicable) data are utilized in developing the three approaches to value: cost, sales, and income capitalization. In an appraisal, market data is also analyzed outside the municipality. These three approaches are developed and then reconciled into a final value conclusion for the subject property.
There is reason to file for the abatement. Now what?
Determining whether or not there is a tax abatement case is sometimes difficult. The assistance of a real estate professional is needed in most cases to assist in determining the market value of the property. In the case of most residential properties: the cost and sales comparison approaches to value are the most applicable. Regardless of the property type, an appraisal prepared for tax abatement purposes will be the basis for the tax abatement appeal. Remember that the burden of proof is upon the applicant. Simply stating that the property is overassessed is not sufficient.
Once the tax abatement application and appraisal report has been filed with the municipality, the process becomes more or less a waiting game. As stated previously, the filing deadline for the tax abatement application is March 1st. The municipality then has until July 1st to respond to the tax abatement application.
If the applicant is denied or the offer is unacceptable, the applicant then has until September 1st to file an appeal of that negative decision one of two places: NH Board of Tax and Land Appeals or Superior Court.
Things to Remember
Filing a tax abatement application does not exempt the taxpayer from paying the real estate tax bill. Tax abatements are not retroactive; however, they do go forward in time. The revised assessment will carry forward in time until changes are made to the property and/or the town conducts a revaluation.
J.A. Cote Appraisals, LLC makes no guarantee in the outcome of a tax abatement appeal.
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