November is Property Tax month. Particularly in a declining real estate market, as we’ve experienced the past few years, questions often arise from homeowners wondering why they don’t see a parallel decrease in the amount of property taxes that they are assessed. It seems that many homeowners are perplexed about how property taxes work in Oregon. Here is a brief explanation:
In 1997, Oregon voters passed Measure 50, the intent and effect of Measure 50 was to provide, for both homeowners and county budgets, a degree of certainty and predictability to property taxes that would be largely immune to significant swing in real estate values.
As of the 1997-1998 tax years, a Maximum Assessed Value (MAV) was established for every property in Oregon. The MAV was established by subtracting 10% from 1995-1996 Real Market Value (RMV) of each property in the State. Measure 50 then dictated that the property tax is based on the lower of the RMV or the MAV and is then listed on the property tax statement as Assessed Value.
To achieve the aforementioned predictability and stability, Measure 50 then provided for a 3% increase in the MAV each year, so long as the RMV of the property remains greater than the MAV. So, while Real Market Values surged by double digits in the Portland Metropolitan Area during some of the years since the inception of Measure 50, property tax valuations could only increase by 3% in those years. Conversely, despite a drop in Real Market Values over the past three or four years, Real Market Values are still, in most cases, well ahead of MAV in most counties. The result being, most can expect to see the standard 3% increase in their property tax bills again this year.
It should also be noted the RMV is determined on January 1st of each year. Homeowner’s don’t receive their property tax statement until late October. In rapidly appreciating or declining markets, this lag time can also contribute to a homeowner’s perception that the Real Market Value listed on the statement is either too high or too low.
To summarize, in reviewing your Property Tax Statement this year, remember the following:
* Real Market Value (RMV) is the approximate market value of your property as of January 1, 2010
* Maximum Assessed Value is the Real Market Value, less 10%, of your property’s 1995-1996 RMV plus 3% in each subsequent year. (For properties constructed and brought onto the assessment rolls post 1995-1996, the average ration of MAV to RMV for all other similar properties in the county is used as the initial MAV baseline.)
* Assessed Value equals the lower of MAV and RMV.
