Taxes, Taxes, Taxes!!

Welcome to On the House and our first post.


Well, it’s tax time and consequently, the subject of the day. As you know our tax year is based on a fiscal year that begins on July 1st and ends on June 30th of the following year. We are now looking at tax statements that cover 2009/2010. Statements are delivered in October and the payment is due on November 15th.


Now, I’ve been paying property taxes for over 25 years and I still pause when I read my statement. There are two values represented there. One is the real market value (RMV) and the other is assessed value. The terms are not unfamiliar but what has always puzzled me is just how the assessed value was derived from the RMV. I’ve always wondered just what formula was used to establish assessed value. A quick call to the good folks at the Multnomah County Assessor’s office was very enlightening. It turns out that, with the exception of new construction, the assessed value is not derived directly from the current RMV.


Let’s journey back to 1997. Measure 50 was passed and everything was set in motion. At that time the assessors turned the clock back to 1995 and took the RMV of record and used that figure to establish the base value of the home. They applied another 10% discount to that value and the new assessed value was determined. That process applied to all existing residential property in Multnomah County. From that point on there was a provision that the assessed value could be increased each fiscal year by a factor of 1-3%. Typically you’re seeing the increases right at the upper end of that range. There is also a provision for what is called “exception value”. This allows an additional tax increase for major remodeling or upgrading to the home.


There is a different formula for new construction. The assessors apply the “changed property ratio” to determine assessed value. They take the sales price of the home and multiply that figure by .5515 and the new base value is established. The ratio is adjusted every year so that figure applies to 2009/2010 only. From that point on the rules regarding the permitted increase limits apply.


One other piece that causes confusion is the actual dollar increase itself. I looked at my statement and my assessed value only went up $6490.00 but my taxes went up $271.91!! To understand what is happening here we need to look at the millage rate. The millage rate is the percentage that is charged for every thousand dollars of assessed value. Right now we’re being charged $21.7866 for every thousand. A home assessed at $100,000.00 would owe $2178.66 in annual taxes. Bear in mind that this millage rate is adjustable as well as the assessed value. Last year, for example, it was $21.1840 per thousand. This increase in millage rate is the one to watch. The assessed value can remain the same year to year and the taxes can still increase with an increase in the millage rate.


The final question that comes up concerns challenging the tax. There is an avenue to do this. You can apply to the Board of Property Tax Appeals (BOPTA) before the 31st of December of this year. You can get petition forms at http://www.oregon.gov/DOR/PTD/BOPTA.shtml or go in person to the county office and get them from the county clerk. It’s an interesting process in itself and beyond the scope of this blog. If you’re interested in pursuing that process there is information that you will need to mount an effective challenge. Contact me at gary@vppihomes.com and I’ll help you through it.


That’s my overview for today. I welcome input in any form. I envision this blog turning into a Q an A forum and look forward to your responses.
Until next time, the information is… On the House.