Property Tax Roundup
I was reading the WSJ this morning and came across THIS POST which references a report issued by the National League of Cities which shows property tax revenues declining for the first time in this recession. It’s kind of interesting if you think about it. Typically property taxes are based on the value of the real property. So despite the fact that property values have been declining nationwide since 2007 this is the first year that tax revenues are declining. There is obviously significant lag time in the process of accessing real estate values.
This prompted me to go to wikipedia and read about Oregon’s landmark property tax legislation that was passed in the 1990’s. Among other things measures 5, 47, and 50 limited property tax growth by 3% per year. Therefore, if a person owns a home and it doubles in value their property tax bill can only rise by 3% per year (unless they made significant property improvements. This explains why homes with the same market value can have drastically different property taxes. If one home has been lived in continuously by the same person for 20 years then beginning in the 1990’s their property taxes could only rise by 3% despite the fact that on average their home’s value likely increased by 4-5% per year.
However, if an identical home across the street was bought and sold multiple times over the same 20 year period their tax bill would have adjusted to the market because when the property changes ownership the 3% limitation doesn’t apply.