Infrastructure and Age of the Town Older towns often have older roads, older sewer systems, older municipal buildings, and older schools. Maintenance costs rise over time. If the town does not have outside revenue sources, taxes can rise significantly to cover ongoing needs. On the other hand, towns that developed more recently often have modern infrastructure, well planned layouts, newer schools, and lower maintenance costs. This does not mean older towns are bad. Some are beautiful, historic, walkable, and extremely desirable. But their charm sometimes comes with higher taxes because upkeep requires money. Effective Tax Rate vs Total Tax Amount One of the most misunderstood concepts in New Jersey is the difference between the total tax bill and the effective tax rate. Most homeowners compare taxes on paper. “This home is twenty eight thousand in taxes. That home is eighteen thousand.” But this does not tell the whole story. The Effective Tax Rate (ETR) looks at taxes as a percentage of the home’s market value (as opposed to the general tax rate) (Some needed definitions: General Tax Rate is the official number used to print your annual bill, the General Tax Rate x Your Home's Assessed Value = Your Tax Bill. The Effective Tax Rate is the only reliable metric for a fair, apples-to-apples comparison when shopping for homes in different towns. Use the General Tax Rate to calculate the specific, current bill for a property after you've decided on a town. Use the Effective Tax Rate to compare the tax burdens of different towns before buying.)
Formula:
16
Powered by FlippingBook