The Vicious Cycle: New Hampshire’s Five-Year Revaluation Cycle
Part II, Article 6 of the New Hampshire Constitution requires “that there shall be a valuation of the estates within the state taken anew once every five years, at least, and as much oftener as the general court shall order.” This requires municipalities to conduct a full revaluation of the property in each respective town or city once every five years. This provision ensures that the assessed values in each municipality will be updated at least every five years which has the benefit of keeping most property in the municipality relatively close to the fair market value that municipalities are required to assess property. The enforcement of this requirement statewide is a relatively recent development, and by that, I mean in the year 2002 following the New Hampshire Supreme Court decision in Sirrell v. State, 146 N.H. 364 (2001). Before the Sirrell decision, some cities were known to have gone as long as thirty years from the last full revaluation. While municipalities with populations over 10,000 are permitted to revalue property annually, and some do, most municipalities conduct revaluations according to a five-year cycle.
The enforcement of the Constitutional requirement to revalue property every five years has its benefits. However, the five-year revaluation cycle can result in sticker-shock after the most recent revaluation. Particularly when the real estate market has experienced significant increases from the date of the last revaluation, the resulting assessments can catch taxpayers by surprise because they have grown accustomed to paying taxes on assessments which were last revalued five years ago when the market value of real estate was significantly lower. Revaluations currently being conducted are changing the assessed values that were last set while New Hampshire’s real estate market was still struggling with the effects of the recession and mortgage crisis. Revaluations currently being conducted can produce values that are dramatically different from the assessed values set five years ago.
Receiving a notice of a change in an assessed value in connection with a revaluation can be shocking, but it is also an opportunity to obtain a reduction in the assessment that may be experienced for five years. The year of revaluation is generally the most important time to review a taxpayer’s assessment for a number of reasons. First, if there is some mistake in the revaluation that results in a higher assessment, correcting it in the first year will have benefits over the next five years. For example, if the revised tax card treats an uninsulated and unheated room as though it were heated and insulated, this will most likely result in higher value than it would have been if the revised tax card accurately described the features of a building. Secondly, different features of a building may have gone out of favor with what the market desires since the last revaluation. If the revised value does not accurately reflect how the different features of a property contribute towards the market value, it is a good opportunity to bring this to the attention of the assessor during the year of revaluation. Finally, as the new values set during a revaluation have not stood the test of time, assessors are more likely to take into consideration a taxpayer’s concerns and lower the assessed values.
By: John F. Hayes, Esq., General Counsel/Senior Tax Representative to Allobar Strategies and former general counsel to the New Hampshire Department of Revenue Administration
For more information on property tax abatement appeals and information regarding revaluations in New Hampshire, please visit Allobar Strategies.