New Hampshire’s heavy reliance on property taxes – which are among the highest in the United States – often produces significant tension with respect to the New Hampshire tax abatement process. Every year, residential and commercial property taxpayers file tax abatements in the hopes that they can reduce their property tax burdens. Not surprisingly, municipalities will typically find reasons to deny tax abatement applications or ignore them altogether. The New Hampshire tax abatement process is a very mechanical procedure with specific requirements and deadlines. It can be complex and confusing. These difficulties often dissuade many taxpayers from submitting a tax abatement application altogether. Those who do submit an abatement application without the assistance of an attorney often receive denials and do not know or understand the basis for the denial or how to address or challenge it. Taxpayers can, however, take advantage of this annual opportunity to reduce their tax burden. To do so, they must gain an understanding of how the New Hampshire tax abatement process works, how to determine if a property is over-assessed, how to address an over-assessment, and what to do if the municipality denies an abatement application. The following information will hopefully simplify the New Hampshire tax abatement process and help taxpayers navigate its many twists and turns.
Overview of the New Hampshire Tax Abatement Process
Under New Hampshire law (RSA 76:16), municipalities may abate property taxes and interest accrued on such taxes “for good cause shown.” “Good cause” can be established by showing an error in the assessment value of the property, a disproportionate assessment, or other grounds (such as poverty or an inability to pay the tax). A taxpayer who challenges the assessment of his or her property has the burden to prove the property was assessed disproportionately compared with other properties in the town. The burden is on the taxpayer to demonstrate a disproportionality existed on the assessment date, (which is usually April 1 for that year’s tax bill).
Who is Eligible to Submit a Tax Abatement Application?
The owner of record of the property as of April 1 of the tax year being challenged may file an abatement application. Renters or tenants, or an owner’s family member or representative, are not eligible to file an abatement application.
How to Apply for a New Hampshire Tax Abatement
After a taxpayer receives his or her final tax bill (usually in November or December), the taxpayer may prepare and submit a written application for a tax abatement with the town. This application must be submitted by March 1. That is a hard deadline. If you miss it, you lose the opportunity to apply for an abatement. The application form can be found here. Forms are also likely available at the town office or town hall. The application form cannot be submitted online. An original signature is necessary. Thus, it must be mailed or hand-delivered.
How to Complete the New Hampshire Tax Abatement Form
The application form above contains specific instructions for how to complete it. However, to make matters easier, here are some quick pointers every taxpayer should keep in mind when completing this form: 1) Complete the application by typing or printing the information. 2) In Section C, list the tax map and lot number for the property. This information can usually be found in the deed or in the property’s records. 3) In Section C, list the assessment of the property identified in the tax bill. 4) In Sections E-G, if the taxpayer’s abatement application is based on a disproportionate assessment, the taxpayer has the burden to show how the assessment was disproportionate. To meet this burden, the taxpayer must show (a) what the property was worth (market value) on the assessment date; and (b) the property’s “equalized assessment” (more on this below) exceeded the property’s market value. 5) The best way to show the property’s market value is by obtaining an appraisal. The taxpayer should attach a copy of the appraisal to the abatement application. Alternatively, a taxpayer could show the property’s market value by presenting sales of comparable properties. An appraisal, however, is much more compelling. 6) In Section H, the taxpayer (not a representative of the taxpayer or an attorney) must sign the application. 7) There is no filing fee for submitting the application. 8) Make a copy of the completed application for your records. (You should make this a habit with other documents as well.) 9) A taxpayer should ensure the application is submitted by the March 1 deadline. The date the municipality will recognize as the filing date is the date the application was (a) hand-delivered to the municipality, (2) postmarked by the post office, or (3) received by an overnight delivery service. To be safe, just make sure the municipality receives your application by March 1. Every taxpayer should understand that submitting a tax abatement application does not stay the collection of taxes. A taxpayer should pay the taxes on the property regardless. If the municipality grants an abatement, you will receive a refund with interest.
How to Determine the “Equalized Assessment”
To calculate the equalized assessment of the property, divide the assessment by the municipality’s equalization ratio. The municipality will usually post its current and historical equalization ratios online. Here are Bedford’s equalization ratios and Manchester’s equalization ratios. For example, let’s assume the market value of a given property is $350,000, the municipality in which that property is located assessed that property at $410,000, and the equalization ratio for the municipality is 109%. To calculate the equalized assessment, divide the assessment ($410,000) by the equalization ratio (109%), as follows:
$410,000 ÷ 109% = $376,147
The equalized assessment for this property is $376,147.
How To Determine If There are Grounds for An Abatement
The most common ground for abatement is that the assessment of the property is disproportionate to other assessments in the town where that property is located. Let’s focus on that determination, and let’s use the hypothetical property identified above. To figure out whether the assessment of the property is disproportionate, the taxpayer must compare the equalized assessment ($376,147, calculated above) with the property’s market value ($350,000). If the equalized assessment exceeds the property’s market value, a disproportionality exists. Here, the property has been disproportionately assessed because the equalized assessment ($376,147) is more than the market value ($350,000) by over $26,000. An attorney can help you understand whether a disproportionate assessment has been made, whether such an assessment is worthwhile to challenge, and other rights you may have.
After An Abatement Application is Submitted, What Happens?
After a taxpayer submits an abatement application, the municipality’s board of assessors will review the application and make a determination. The board can grant the application, deny the application, or not respond at all. If the board does not respond, that is deemed — under the statute — to be a denial of the application. The board has until July 1 to respond. If the board grants the application, and you are happy with its decision, you will receive a refund with interest. If the board denies the application or does not respond, or if you are otherwise dissatisfied with the board’s decision, you may appeal it.
How to Appeal the Municipality’s Decision
A taxpayer has two options when appealing the municipality’s decision: 1) A taxpayer may appeal to the State of New Hampshire Board of Tax and Land Appeals. The appeal must be filed by September 1. An application fee is required. 2) A taxpayer may forego the Board of Tax and Land Appeals and file a petition in the New Hampshire Superior Court. The petition must also be filed by September 1. A filing fee is required. We have handled New Hampshire tax abatement appeals in the past, and (for various reasons) we usually recommend filing a petition in Superior Court. Moreover, if the taxpayer files an appeal with the Board of Tax and Land Appeals, he or she waives the right to file a petition in Superior Court. At this stage, hiring an attorney will help you understand the best avenue for challenging the municipality’s decision, how to navigate the appeal process, and how to interact and negotiate with the municipality during this process – because the municipality will likely hire its own attorney to handle the appeal.
How to Determine Whether An Appeal is Worthwhile
The taxpayer should obviously perform a cost-benefit analysis to determine if an appeal is worthwhile. An abatement on an individual homeowner’s property will likely produce property tax savings of $500 – $1000 per year. An abatement on a commercial property will likely produce property tax savings of thousands of dollars, and even tens of thousands of dollars, per year. The taxpayer – whether an individual homeowner or a commercial business – should determine whether the likelihood of obtaining an abatement will justify the time and expense of an appeal. Again, an attorney can help you understand the likelihood of success and assist with this determination. In many instances, the municipality will attempt to resolve the appeal through a settlement. Engaging an attorney to assist with the negotiation will usually facilitate a beneficial resolution. The New Hampshire tax abatement process, while somewhat complex and deadline-oriented, can nevertheless be navigated effectively. The information and guidelines above provide taxpayers with the tools they need to take advantage of this process.