Quote:

JCLaw...
Does that calculation account for County and School taxes?

I have bought new construction and I am also a realtor....my experience has shown me that when a developer tells you that taxes are "1.6%" of purchase price...well, that is a guess-timate. The reality is no one knows until you get your tax bill at closing- as was previously stated. One of the problems is is that every abatement is different. I have found that visiting the tax assessor's office has been helpful in clarifying most tax inquiries that I have had.

As for calculating what your taxes will be in 20 years...i wouldnt bother trying to figure out that one. I dont know if the stats on this one have changed recently but the average american buys and then sells his/her home after 7 years. You are just going to spin your wheels trying to figure these sort of things out in this kinda town.

A friend recently purchase a condo with a tax abatement in JC
they could not find out what the taxes were until they got the tax bill at closing.
Only in JC does this happen, all other places when you buy
property you are able to find out what the taxes are before you puchase.

Quote:

The short answer is: No one knows. And therein lies part of the problem...

Quote:
HA! Good Luck with that!

Call city hall, 201-547-5000. Speak to the tax collector.

so you want to predict what the potential tax liability could be in 20 years once the abatement expires?

even the simplest of calculations require you to make three assumptions that will ultimately determine the results: (a) your expected price appreciation of the property, (b) a reasonable expectation of the relationship between market value (price) and assessed (tax) value, and (c) the tax rate.

it would make more sense to calculate what the tax liability would be if you did not have an abatement. since the assessed value is significantly less - a fraction - of the market value, you could assume that the tax value is 1/4 of the current market value and then apply the tax rate of 2.858, then .....

most recent purchase price of your apartment (if within the last year) x rate x ratio.

For Jersey City in 2009, these numbers are:

6.001% 25.64%

So if you pay $500,000, the taxes will be 1.53% of price or $7,650 under ordinary taxation.

If you buy now and your abatement expires in say 5 years, and there are no obvious comparable sales in the area in the next 5 years, the tax assessor will use the RATIO from when you bought the apartment at the price you paid and the RATE from today.

So let's say you pay $500k today and the ratio is .2564. In 5 years say the RATE is 7% instead of 6.001%.

Your taxes in 5 years will be $8,975. The reason that is fair is because you have to assume that the property appreciated over the 5 years you've owned it relative to the old RATIO.

In the event that there is a reval between now and then, and let's say the reval happens in the year you go off the abatement, then the RATIO will be 100% and the rate will be much lower than now. In that case the assessor will have a revalued amount for your apartment since he was required to go around and do that for every property in the city.

Hello,
We're considering a condo that has a current tax abatement. How can we predict what the real tax rate will be once the abatement has run out? The abatement rate is 1.6% of sale price. How can we calculate the rate for 20 years from now? What is the current rate, even?

Thanks much.