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Re: JC Real Estate Taxes
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ProdigalSon wrote:
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Dolomiti wrote:
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ricky241 wrote:
yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes.

Disclaimer: I'm not an accountant.

A tax deduction is not the same thing as a tax credit. It may not be a 1-to-1 savings.

I also don't think that developers get an extra benefit compared to condo owners. A deduction is a deduction is a deduction. Any difference would be due more to scale and to the way corporate and individual taxes are handled.

If you use TurboTax or a similar tax program, you could try seeing the direct effect of a $2000 reduction in property taxes.


I am fairly certain PILOTS are considered Property Tax and deducted as such on a Federal tax return.

To determine your benefit received from a deduction, and this is for a normal tax payer, you can just take your effective Federal tax rate (which is provided to you by turbo tax) and multiply it by the total deduction. So if your effective tax rate is 35% you multiply that by $10,000 in property taxes and you save $3500 in Federal taxes. This is rudimentary but it is accurate.



The IRS does consider them as regular RE taxes and are treated the same.

Posted on: 2014/3/12 0:44
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Re: JC Real Estate Taxes
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Dolomiti wrote:
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ricky241 wrote:
yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes.

Disclaimer: I'm not an accountant.

A tax deduction is not the same thing as a tax credit. It may not be a 1-to-1 savings.

I also don't think that developers get an extra benefit compared to condo owners. A deduction is a deduction is a deduction. Any difference would be due more to scale and to the way corporate and individual taxes are handled.

If you use TurboTax or a similar tax program, you could try seeing the direct effect of a $2000 reduction in property taxes.


I am fairly certain PILOTS are considered Property Tax and deducted as such on a Federal tax return.

To determine your benefit received from a deduction, and this is for a normal tax payer, you can just take your effective Federal tax rate (which is provided to you by turbo tax) and multiply it by the total deduction. So if your effective tax rate is 35% you multiply that by $10,000 in property taxes and you save $3500 in Federal taxes. This is rudimentary but it is accurate.

Posted on: 2014/3/11 20:54
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Re: JC Real Estate Taxes
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ricky241 wrote:
yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes.

Disclaimer: I'm not an accountant.

A tax deduction is not the same thing as a tax credit. It may not be a 1-to-1 savings.

I also don't think that developers get an extra benefit compared to condo owners. A deduction is a deduction is a deduction. Any difference would be due more to scale and to the way corporate and individual taxes are handled.

If you use TurboTax or a similar tax program, you could try seeing the direct effect of a $2000 reduction in property taxes.

Posted on: 2014/3/11 19:55
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Re: JC Real Estate Taxes
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ricky241 wrote:
I have always wondered how the tax abatements/assesments on high rise towers benefit the condo owners.....

yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes, which if you were allowed to could have gotten you an additional $1000-$2000. Instead, you can claim only city taxes against property tax (which is less than a $1000 bucks in most cases).

So except for developers, do condo unit owners really benefit ? or is the same for them?


This is the IRS ruling on PILOTS
"The IRS ruled that the PILOT qualified as a deductible real property tax because it satisfied a three-prong test set forth in a Revenue Ruling over 38 years old, that is Rev. Rul. 71-49, dated January 1, 1971, which provides that a PILOT will be treated as a real property tax if:

The payments are measured by and are equal to the amounts imposed by the regular taxing statutes;
The payments are imposed by a specific state statute (even though the vehicle of a lease agreement is used); and
The proceeds are designated for a public purpose rather than for some privilege, service, or regulatory function, or for some other local benefit tending to increase the value of the property upon which the payments are made.

The IRS also ruled that the condominium owners could deduct their respective shares of the PILOT payments included in their common charges.

Most condo owners I know have been deducting their PILOTS payments to JC on their incomes as RE taxes.

Posted on: 2014/3/11 19:29
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Re: JC Real Estate Taxes
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ricky241 wrote:
I have always wondered how the tax abatements/assesments on high rise towers benefit the condo owners.....

yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes, which if you were allowed to could have gotten you an additional $1000-$2000. Instead, you can claim only city taxes against property tax (which is less than a $1000 bucks in most cases).

So except for developers, do condo unit owners really benefit ? or is the same for them?



It feels like a scam to me here in Jersey City. In NYC, an abatement is a real abatement.


http://www.nydailynews.com/new-york/t ... 00m-year-article-1.134978

Posted on: 2014/3/11 18:35
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Re: JC Real Estate Taxes
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I have always wondered how the tax abatements/assesments on high rise towers benefit the condo owners.....

yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes, which if you were allowed to could have gotten you an additional $1000-$2000. Instead, you can claim only city taxes against property tax (which is less than a $1000 bucks in most cases).

So except for developers, do condo unit owners really benefit ? or is the same for them?

Posted on: 2014/3/11 17:27
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Re: JC Real Estate Taxes
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dtjcview wrote:

So no, new developments do not have extremely high tax obligations. Quite the reverse. By the posts on this board it seems they get huge tax breaks - most large developers get a 15-30 year PILOT, at the end of which, when the developer decides to convert the use from apartments to condos, there is another 5-year 30% or so tax abatement tagged on to that.



Right, I'm talking about smaller new developments that do not have PILOTS/abatement. It seems they would get hit the hardest by the current rules.


I'd guess new small devs do slightly better than average compared to all of JC. Every new dev will get some kind of abatement - typically the 30% for 5 years. Big devs get whatever deal the developer can squeeze out of the City. Also a lot of downtown properties are grossly undertaxed - their value has increased way above the 300% since the 80's whereas other areas outside of downtown are over-taxed. if you read the reval thread you'll get the picture.

But you're right in the respect that in downtown, new small devs probably have worse taxes than a lot of other downtown sales.

Posted on: 2013/7/17 3:25
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Re: JC Real Estate Taxes
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dtjcview wrote:

So no, new developments do not have extremely high tax obligations. Quite the reverse. By the posts on this board it seems they get huge tax breaks - most large developers get a 15-30 year PILOT, at the end of which, when the developer decides to convert the use from apartments to condos, there is another 5-year 30% or so tax abatement tagged on to that.



Right, I'm talking about smaller new developments that do not have PILOTS/abatement. It seems they would get hit the hardest by the current rules.

Posted on: 2013/7/16 23:45
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Re: JC Real Estate Taxes
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For new construction, that would make the tax obligation extremely high relative to other properties. Unless of course the "assessed market value" isn't really market value


Yep, they are pretty steep even with the tax abated rate. That's why it just really hits a nerve when I hear people complaining how these new developments are getting tax abatement and not paying their "fair" share.


They level the playing field with "assessed values". Basically they reverse the calculation, so at the moment assessed value would be about 1/3rd of current market value. Assessed value is baselined on the last reval in the 80's, and the yearly JC equalization rate is supposed to reflect the increase in value since then. If and when the reval occurs, the JC equalization rate should in theory be reset to 100% (currently at 32.72%).

So no, new developments do not have extremely high tax obligations. Quite the reverse. By the posts on this board it seems they get huge tax breaks - most large developers get a 15-30 year PILOT, at the end of which, when the developer decides to convert the use from apartments to condos, there is another 5-year 30% or so tax abatement tagged on to that.

Posted on: 2013/7/16 22:02
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Re: JC Real Estate Taxes
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ThirdStreet wrote:
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For new construction, that would make the tax obligation extremely high relative to other properties. Unless of course the "assessed market value" isn't really market value


Yep, they are pretty steep even with the tax abated rate. That's why it just really hits a nerve when I hear people complaining how these new developments are getting tax abatement and not paying their "fair" share.


Not to mention the fact most of that complaining comes from someone who was paying 1%!

Posted on: 2013/7/16 18:02
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Re: JC Real Estate Taxes
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For new construction, that would make the tax obligation extremely high relative to other properties. Unless of course the "assessed market value" isn't really market value


Yep, they are pretty steep even with the tax abated rate. That's why it just really hits a nerve when I hear people complaining how these new developments are getting tax abatement and not paying their "fair" share.

Posted on: 2013/7/16 17:37
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Re: JC Real Estate Taxes
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A word to the wiser scrutinize your tax bills and records for that matter. Every year a few of my neighbors must go back to city hall tax collector's office to re-write their tax bills for mistakes that were made by the J.C. tax office. These are senior citizens whose records have been botched up those that work in the collector's office. I can understand how the city council who does not have knowledge in finance but can vote on a budget. However, it is another thing to hire workers in a special finance department and not know their elbow from any other body part.

Posted on: 2013/7/16 17:00
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Re: JC Real Estate Taxes
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Ok I get it raise the taxes by 8% then reinstitute the reval but don't drop the rates too far so as to generate two tax hikes in less than a year's time. Yeah that?s it.

Posted on: 2013/7/16 16:55
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Re: JC Real Estate Taxes
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Just wanted to confirm what everyone else is saying about the PILOT.

The original owner of my unit bought in 2005. I bought this year for over 100k less than he paid. I spoke to the tax assessor who confirmed that my purchase price outside of a PILOT building would net a lower tax rate.

After the 8% increase we will be more in the same ballpark however...especially since my understanding is the PILOT is not affected by the increase...can someone confirm this?

But it does debunk the theory that the PILOT owners are not paying their "fare share" as I am paying higher than my unit is currently worth.

Posted on: 2013/7/16 16:17
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Re: JC Real Estate Taxes
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The current tax rate (schools, city and county) is a little less and $75.00 The actual figure will be on the August bill when the city strikes the budget.

Posted on: 2013/7/16 15:31
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Re: JC Real Estate Taxes
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Bubble_Tea wrote:
Can someone please explain to me how JC taxes for condos works with specific details?

I have heard very mixed and vague information from a number of sources. When I attempt to get clarification, it becomes clear that people don't really have the specifics.

I am trying to find out the following:

(a) what the general tax rate *currently* is (when there is no abatement) (I understand that the rate is about to go up.)

(b) whether the assessed/taxable value of the property is *automatically* adjusted based on each new purchase of the property for both abated and non-abated condos.

(c) any other info that you think is relevant to the calculation.


$70 per $1000 of assessed value
condos in my area have the same assessment when purchased nothing changes and the tax rate stays the same.

Posted on: 2013/7/16 12:11
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Re: JC Real Estate Taxes
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JadedJC wrote:
PILOTS are based on the selling price of the condo when it first changes hands between developer and the initial owner. The reason you see big variations within the same building is that many buildings were completed right at the height of the real-estate bubble around 2007--08. The units that were first sold during this period will have higher PILOTS because they were pretty much sold at the peak of the market. When the market tanked after 2008, the developers in these buildings still had unsold inventory that they subsequently marked down in price - hence these units will have lower PILOTS. The PILOTS do not reset with a resale of the property.


Yes. This is what I understood from some research while thinking about buying an apartment a few years ago. I may still be wrong, but this is what I understood. The condos that have abatements have taxes that are non-negotiable for the life of the abatement (15 years for a lot of downtown condos), and is based on the first sale price when the condo changed hands from developer to buyer. So, buying one of these condos, your effective tax rate could be way higher than it should be, if its based on 2007 market value at the peak of the market, or vs if it was based on 2005 or 2010 market value. I don't want to mention which buildings in downtown that my opinion generally have taxes too high or a good deal based on when they went on sale, because I don't want to knock certain buildings. But yeah, when the building opened for sale and the state of the economy definitely affects the taxes.

Posted on: 2013/7/16 3:23
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Re: JC Real Estate Taxes
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I was wrong about the Pilots - dtjcview has a better grasp on them.

My Unit was a fixed percentage 1.8 something % of purchase price for the taxes for 5 years. So my assessed value as of right now has nothing to do with my taxes. Additionally the variance between my unit and others in the building will be negligible because all have been sold in the same range. And even after 5 years the values should be similar.

I called the tax department, they are very nice and very helpful and were able to follow up with me via email. I even got a picture of what my building looked like circa 1930's which was pretty neat. They also told me what my taxes would be if I was unabated and I'm saving about 30% before any increases, additionally I don't think I'm susceptible to an increase.

Posted on: 2013/7/16 1:15
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Re: JC Real Estate Taxes
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JadedJC wrote:
But if you have a specific property you're interested in, your best bet is to go to City Hall and ask the people at the Tax Assessor's office rather than ask people here to address generalities. They are very nice and helpful there.


Bravo!

Posted on: 2013/7/16 0:35
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Re: JC Real Estate Taxes
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Bubble_Tea wrote:
Are you certain that the tax base doesn't adjust for some building at the time of subsequent purchases? I keep hearing that.


Yes, I'm pretty sure that's the case for most of the waterfront buildings that went up in the last 10 years. My PILOT didn't reset when I purchased it from the initial owner, who had bought from the developer when the building was completed in 2008.

But if you have a specific property you're interested in, your best bet is to go to City Hall and ask the people at the Tax Assessor's office rather than ask people here to address generalities. They are very nice and helpful there.

Posted on: 2013/7/15 23:17
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Re: JC Real Estate Taxes
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Bubble_Tea wrote:
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dtjcview wrote:
Useful detail on the process under:

http://www.state.nj.us/treasury/taxat ... /referencematerials.shtml

Strictly speaking, PILOTS and abatements are different things. The PILOT is paid by a developer instead of paying property taxes, abatements are a reduced assessed value, that typically are applied for up to 5 years after an improvement to an existing property. One big different is the PILOT is paid to the City only, whereas an abated property pays taxes to both City and County. PILOTS don't contribute to school funding for example - a huge local issue.

As far as having different assessment on similar condos, its probably not an exact science. The assessment is probably done when the master deed on a new or converted condo property is filed with the County, and not necessarily at the time of purchase/sale. If the assessments differ between similar condos, it might be related to how and when the developer filed the deed, or converted it's use from a rented apartment subject to a PILOT, to a condo subject to regular property tax.

Bottom line, the assessment isn't directly related to the purchase/sale price, though may be incidentally related as a result of timing.


Thanks for the info and the link.

See the comment from ProdigalSon above. What you are saying seems to contradict the experience he has in his building.


There are too many variables to comment, without specific examples of property addresses.

If you plug in the addresses into the link below, you'll see the exact payments and billing based on the assessment. It will also show any abatement (but not necessarily a PILOT).

http://taxes.cityofjerseycity.com/AccountSearch.aspx

It is quite possible that one condo had its deed filed 4-5 years ago at the height of the property boom, and another condo in the same building had its deed filed more recently, and had a much lower assessment. Or more likely, one owner may have appealed and the other not. Assessments don't get "marked-to-market" simply as a result of sales.

Posted on: 2013/7/15 23:10
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Re: JC Real Estate Taxes
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JadedJC wrote:
PILOTS are based on the selling price of the condo when it first changes hands between developer and the initial owner. The reason you see big variations within the same building is that many buildings were completed right at the height of the real-estate bubble around 2007--08. The units that were first sold during this period will have higher PILOTS because they were pretty much sold at the peak of the market. When the market tanked after 2008, the developers in these buildings still had unsold inventory that they subsequently marked down in price - hence these units will have lower PILOTS. The PILOTS do not reset with a resale of the property.


Thanks. And Wow, that establishes an enormous tax break for some condo units. And the bulk of the break isn't even the lower tax percentage. It's the fact that the percentage is locked in against a relatively ultra-low purchase price, regardless of market changes.

Are you certain that the tax base doesn't adjust for some building at the time of subsequent purchases? I keep hearing that.

Posted on: 2013/7/15 23:09
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Re: JC Real Estate Taxes
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PILOTS are based on the selling price of the condo when it first changes hands between developer and the initial owner. The reason you see big variations within the same building is that many buildings were completed right at the height of the real-estate bubble around 2007--08. The units that were first sold during this period will have higher PILOTS because they were pretty much sold at the peak of the market. When the market tanked after 2008, the developers in these buildings still had unsold inventory that they subsequently marked down in price - hence these units will have lower PILOTS. The PILOTS do not reset with a resale of the property.

Posted on: 2013/7/15 23:01
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Re: JC Real Estate Taxes
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dtjcview wrote:

Also, the implied tax rate against implied current market value would be:

7.184 * 0.3272 = 2.35%


For new construction, that would make the tax obligation extremely high relative to other properties. Unless of course the "assessed market value" isn't really market value.

Posted on: 2013/7/15 23:00
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Re: JC Real Estate Taxes
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Yvonne wrote:
I suggest you get a copy of the agreement. I have attended many council meetings and have witnessed many abatement agreements. You would be surprised how different some agreements are. Some are base on construction cost other agreements are based on sales price. Then other agreements have bump up costs and others agreements do not.


Thanks. But I am just trying to get a general sense of tax obligations so that I can understand how they effect market value.

Posted on: 2013/7/15 22:56
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Re: JC Real Estate Taxes
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dtjcview wrote:
Useful detail on the process under:

http://www.state.nj.us/treasury/taxat ... /referencematerials.shtml

Strictly speaking, PILOTS and abatements are different things. The PILOT is paid by a developer instead of paying property taxes, abatements are a reduced assessed value, that typically are applied for up to 5 years after an improvement to an existing property. One big different is the PILOT is paid to the City only, whereas an abated property pays taxes to both City and County. PILOTS don't contribute to school funding for example - a huge local issue.

As far as having different assessment on similar condos, its probably not an exact science. The assessment is probably done when the master deed on a new or converted condo property is filed with the County, and not necessarily at the time of purchase/sale. If the assessments differ between similar condos, it might be related to how and when the developer filed the deed, or converted it's use from a rented apartment subject to a PILOT, to a condo subject to regular property tax.

Bottom line, the assessment isn't directly related to the purchase/sale price, though may be incidentally related as a result of timing.


Thanks for the info and the link.

See the comment from ProdigalSon above. What you are saying seems to contradict the experience he has in his building.

Posted on: 2013/7/15 22:54
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Re: JC Real Estate Taxes
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From what I understand, Abated properties do not pay real estate taxes. They make PILOTS Payments In Lieu of Taxes. These are typically based on the selling price, at least mine was, but I suppose could be based on assessed value, and paying a percentage of tax. I think that some of the older buildings may have been done in this fashion.



That is different from what some other people are saying on this same thread. But based on the tax (or PILOT Payment) differences I am seeing within a single building, that makes sense.

Just to clarify, are you saying that the tax base automatically adjusts in your building each time there is a new sale and purchase price to go along with it?

Posted on: 2013/7/15 22:53
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Re: JC Real Estate Taxes
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Bubble_Tea wrote:
......

Also, I heard the reval was cancelled. Have you heard that it is back on?


If you are buying, work on the assumption that it's postponed, not cancelled.

Posted on: 2013/7/15 22:47
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Re: JC Real Estate Taxes
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I suggest you get a copy of the agreement. I have attended many council meetings and have witnessed many abatement agreements. You would be surprised how different some agreements are. Some are base on construction cost other agreements are based on sales price. Then other agreements have bump up costs and others agreements do not.

Posted on: 2013/7/15 22:32
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Re: JC Real Estate Taxes
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Useful detail on the process under:

http://www.state.nj.us/treasury/taxat ... /referencematerials.shtml

Strictly speaking, PILOTS and abatements are different things. The PILOT is paid by a developer instead of paying property taxes, abatements are a reduced assessed value, that typically are applied for up to 5 years after an improvement to an existing property. One big different is the PILOT is paid to the City only, whereas an abated property pays taxes to both City and County. PILOTS don't contribute to school funding for example - a huge local issue.

As far as having different assessment on similar condos, its probably not an exact science. The assessment is probably done when the master deed on a new or converted condo property is filed with the County, and not necessarily at the time of purchase/sale. If the assessments differ between similar condos, it might be related to how and when the developer filed the deed, or converted it's use from a rented apartment subject to a PILOT, to a condo subject to regular property tax.

Bottom line, the assessment isn't directly related to the purchase/sale price, though may be incidentally related as a result of timing.

Posted on: 2013/7/15 22:31
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