The Finch Formerly Known As Gold

30 November 2004

What's it worth to you?

Glen Whitman of Agoraphilia proposes incentives for accurate property valuation by taxing authorities:

My parents' property taxes, like those of many homeowners, are constantly rising — not because the tax rates go up, but because the city keeps raising the assessed value of the property. The assessed value is almost certainly higher, probably a lot higher, than what the property could actually sell for on the open market. The government-employed assessors naturally have an incentive to overestimate the value of property, because doing so boosts revenues.

So here’s my proposal: Any property owner whose property is subject to a tax based on a government-assessed valuation should have the option to force the government to purchase the property at, say, 97% of the assessed value. This would give the state a strong incentive not to overvalue property, since whenever it did so, it could be faced with the losing proposition of buying at above-market value and then selling at actual-market value.

Why 97 percent?

[T]he buy-out percentage would need to be set low enough that if the state’s assessment were approximately correct, most property owners would still choose to sell in private markets.

Makes sense to me. I don't think this particular problem is rampant where I live — Oklahoma County has most recently valued Surlywood at $70,172, which is a bit less than I paid for it a year ago, and the current US News and World Report claims (in a chart that isn't reproduced in the Web version of the article) that home prices in this market rose 17.4 percent in the past year. More to the point, the 5-percent cap on assessed value goes into effect next year on this property, unless I sell. (Fat chance.)

Still, I keep hearing from family members in places like Austin that their property taxes have risen not only out of sight but out of telescope range, and increased valuation, they say, is the culprit.

(Via Jane Galt.)

Posted at 11:23 AM to Dyssynergy

Around here municipal and county tax rates remain more or less flat, while school taxes rise. However, the real source of sticker shock is property values. I think we have fairly accurate assessments, re-done on an annual basis. (Further in towards the big cities they may not do a new appraisal for decades.)

This means that around here your tax assessment is a reasonable approximation of your market value. If anything, it may lag behind a bit. This still means that seniors can be taxed out of town, but if they are, they have a really big wad of cash to take with them.

Posted by: The Proprietor at 11:44 AM on 30 November 2004

I should add that this does not prevent abuse of the system. When Newark finally got around to doing a city-wide reappraisal a few years ago (after not doing one since the 70s) the state gave them the right to add new taxes to payroll checks and commuter parking lots.

This income was supposed to help offset the rise (in some cases doubling) of residential property taxes. Instead they spent it on pork barrelling and property owners were still hit with huge new levies. When a judge objected they went to the state legislature and got the rules changed. Such is life in a city where you can deliver huge Democratic voter majorities to keep a blue state from turning red.

Posted by: The Proprietor at 11:51 AM on 30 November 2004

In Ft Lauderdale they have a 3% cap on property tax raises per year, but when you sell, the new buyer has to pay on the current assessd value. So the taxes we pay on the $80,000 dollar townhouse we bought 7 years ago are SUBSTANTIALLY less than buyers paying $200,000 for the same townhouse now.

Posted by: mark at 11:56 AM on 30 November 2004

Basically the same rule we have here, at least as regards transfers of property. Until the county reassessed this place, I was paying taxes based on the previous owner's capped value, which was somewhere around $55k. The new assessment came out in October. This time next year, I expect the new value to be no higher than $73,681, though the tax rate may change without regard to the cap rule.

Posted by: CGHill at 1:09 PM on 30 November 2004

In Georgia, to be a property tax assessor you have to have qualified to be at least a registered real property appraiser, and maintain that registration with annual continuing education. The requirements to be registered are almost the same in every state, thanks to a national set of standards and practices.

When I was in the ground-floor course, we had a county assessor in for a one-week portion of the six-week course for her continuing-ed, and although it wasn't, I believe, the standards-and-practices portion, it could just as easily have been.

The point being, that at least in Georgia, it's not hugely likely that county assessors are going to be unaccountable for how they go about assessing taxable value.

Taxable value is not considered the same as market value, but the profession has good reason to be sensitive to perceptions about this kind of thing.

If Oklahoma's tax assessors aren't required to adhere to the standards and practices of the appraising profession, that might be a worthwhile change to agitate for.

Posted by: McGehee at 3:07 PM on 30 November 2004