To Conquer, Taxpayer Must Divide
A New Jersey appellate court recently affirmed the decision of Presiding Tax Court Judge Patrick DeAlmeida, in which the Tax Court affirmed multi-year assessments on six commercial condominium units owned by the same party. The units were located in a five-story building in the Township of Lyndhurst, all of which were owned by the taxpayer, 1280 Wall SPE, LLC, and rented to multiple tenants.
The taxpayer’s appraiser valued the units as one single unit, on the premise that the “highest and best use” of the property was as a multi-tenanted office building. The appraiser, who was the only witness at trial, did not provide an allocation of value between the six units, and instead took the position that one could use the percentage interest attributable to each condominium unit int he master deed to determine the value from the whole attributable to each unit.
The municipality moved to dismiss the taxpayer’s complaint due to its valuation theory, and alternatively argued that the assessments on the six units should be affirmed because the taxpayer failed to overcome the presumption of correctness enjoyed by the assessments. See, e.g. Pantasote Co. v. Passaic, 100 N.J. 408, 412 (1985). The Tax Court judge affirmed the assessments because he concluded that the taxpayer failed to overcome the presumption of correctness. He held that, in order to value the separate units as a single economic unit, the party asserting such theory must determine (a) the overall value of the combined parcels/units, and (b) the allocation of the value to each of the component parcels. As a result, because the taxpayer failed to allocate the overall value, insufficient evidence existed and the assessments were affirmed.
On appeal, the Appellate Division affirmed the Tax Court’s judgment per curiam, noting that the lower court’s opinion was thoughtful and comprehensive, and that methodology offered by the taxpayer’s appraiser — to divide the whole value by the percentage of condominium ownership interest – was inadequate.
A copy of the appellate court’s opinion in 1280 Wall SPE, LLC v. Tp. of Lyndhurst (A-1129-12T1) is available here.
