The challenging economy presents an extra incentive for owners of real estate to carefully consider whether their properties have been accurately assessed and whether filing a tax abatement makes sense. If you own or lease property in New Hampshire and are considering filing a tax abatement, you must act, in most cases, before March 1, 2009.
BACKGROUND
Under New Hampshire law, tax assessments must be based on the property’s market value as of April 1st for the applicable tax year as adjusted by the town’s general level of assessment. A particular town’s “level of assessment” is the amount on average by which assessed values vary from market values. The New Hampshire Department of Revenue Administration annually develops an “equalization ratio” for each municipality to correlate assessed values to market values. Assessed values should equal market values multiplied by the equalization ratio. For towns where assessed values exceed fair market value, the equalization ratio will be above 1.0, and vice versa. For example, if a property’s fair market value is $1,000,000 and the municipality’s level of assessment is 1.2, then the assessed value should be $1,200,000. Just because your assessed value exceeds market value does not mean you are entitled to an abatement. The New Hampshire Supreme Court has held that if all taxpayers are being assessed by the same amount over fair market value then everyone is paying their proper proportionate share. Therefore, to evaluate the merits of a tax abatement request, a taxpayer needs to understand both the market value of its property as well as the town’s level of assessment.
ABATEMENT REQUEST
Any appeal of your property assessment starts with filing an Abatement Request at the local level. This is essentially a formal request for the municipality to review its valuation determination. There is a prescribed form to use and forms are typically available at the local assessing office or printable from most towns’ web sites. The Abatement Request must set forth at least a brief explanation of the reason(s) the taxpayer is seeking an abatement. In general, the local Abatement Request must be filed no later than March 1st or two (2) months after the final tax bill, whichever is later.
GOOD CAUSE
Municipalities may abate taxes for good cause shown under NH RSA c. 76:16. To show good cause, a taxpayer generally needs to prove that the assessment is inaccurate or disproportionate. To so demonstrate, a taxpayer must usually show one of the following:
- there are mistakes on the assessment card;
- the property is over assessed based on the town’s level of assessment; or
- the property is disproportionately assessed compared to other comparable properties.
At a minimum, some evidence of fair market value and the town’s level of assessment will be needed. It is also helpful to be able to point to other similar properties which have a lower assessed value. A formal appraisal is not required, but would be very useful. The more information a taxpayer has to support its abatement request the better.
Property owners are not required to pay their taxes in order to preserve the right to seek a tax abatement. However, filing an abatement application does not stay or eliminate the requirement to pay taxes. If taxes are not paid, then interest and penalties will accrue during the abatement process. The final amount owed will be adjusted depending on the outcome of the abatement case. If taxes are paid, then any overpayment will be refunded with interest after the case is decided.
Municipalities are required to decide abatement requests no later than July 1st or six (6) months after the final tax bill, whichever is later. If no action is taken by the municipality within that period, then the abatement request is deemed denied.
APPEALS
Board of Tax and Land Appeals/ Superior Court
If you are unsatisfied with the local decision, then you may file an appeal with either the Board of Tax and Land Appeals (“BTLA”) or the county Superior Court; but not both. In general, appeals must be filed no later than September 1st or eight (8) months after the final tax bill, whichever is later.
There are important strategic and practical issues to consider in deciding where to file the appeal. We can help you evaluate the pros and cons of each option.
To succeed in an appeal, the taxpayer bears the burden of proving that it has been taxed disproportionately. Establishing the market value of the property as of April 1st is part of this burden. An appraisal or other solid evidence of value will be required to meet this burden. Retaining counsel is advisable with appeals to the Board of Tax and Land Appeals and is essential for appeals to the Superior Court.
Supreme Court
Appeals of decisions of either the BTLA or the Superior Court may be taken to the New Hampshire Supreme Court. These appeals must be filed within thirty (30) days of the final decision of the lower tribunal. With respect to decisions of the BTLA, a taxpayer must first file a motion for a rehearing setting forth every ground which it believes is unreasonable or unlawful. Any ground not set forth in the motion for rehearing is not reviewable by the Supreme Court. Taxpayers may not appeal to the Supreme Court until the motion for rehearing is denied or heard. The Supreme Court will overturn decisions of the BTLA if there has been an error of law, and the Superior Court if its decision lacks evidentiary support.
INVENTORY FORMS
Some municipalities require the annual filing of a form known as an “Inventory of Taxable Property (PA-28) Form” to assist in identifying real estate subject to taxation. In municipalities where the Inventory Form is required, the form must be filed by April 15th to preserve the right to file an abatement for that tax year. Many municipalities do not require the filing of an Inventory Form (including Concord, Manchester, Nashua, and Portsmouth). However, it is important to determine whether your municipality requires this form since failure to timely file forfeits your right to seek a tax abatement. The deadlines described above cannot be extended. Strict compliance with these deadlines is imperative to preserve your right to seek an abatement.
We would be happy to assist you in evaluating and/or pursuing tax abatements.