Oregon Property Taxes Trade Offs
Oregon Property Taxes: As a member of the Washington County Board of Property Tax Appeals (BOPTA) for 11 years, I have acquired a greater understanding of our Oregon property tax system than the average citizen, and it seems many government leaders.
The Oregonian ran a story on 2/28/2013 titled “Time to tweak property taxes?” Has time eroded our memories as to why we ended up with this “insane” tax system? As a consequence of Measure 5, Oregon property taxes rose dramatically each year in the early 90’s and Measure 50 was passed to limit this escalation. We ended up with a system that generally caps increases in property taxes to 3% a year. This is called Assessed Value on your property tax statement. If a home owner remodels and increases the value of their home, or voters in a neighborhood vote in tax increases, this 3% limitation can be increased. Measure 50 has allowed tax payers and local governments to be able to budget from year to year. How do you think tax payers would have felt if their Oregon property taxes were raised 15% or so each year that matched the increase in home values in the mid 2000’s?
The article talks about “compression”. Compression is complicated an ingenious mechanism to further limit Oregon property taxes. Compression links Oregon property taxes to Real Market Value. Taxes per thousand of Real Market Value cannot exceed 5% for schools and 10% for local government. When property values were appreciating each year and Real Market Value was well above Assessed Value, schools and local governments were not affected. They only started complaining that they were not getting every dollar voted for when property values decreased and Assessed Value and Real Market Value got closer together and triggered the compression limitation. This is an issue that does not need fixing. It will mostly disappear when property values start appreciating again. The real estate market has finally shown signs of improving.
There are trade-offs for the predictability of our system. The Oregonian article identified an issue that does need tweaking. Like properties can have dramatically different tax bills. Most of this problem can be traced back to the value that went on the tax rolls in 1997 and the big increase in Real Market Value of homes in certain neighborhoods since 1997. This has resulted in homes with substantially different Assessed Values. The League of Oregon Cities answer is to set the Assessed Value to the sale price. This would cause a substantial increase in Oregon property taxes. If you really want a “fair system for tax payers”, apply the Changed Property Ratio (CPR) to the sale price. This CPR is applied to the Real Market Value of new homes to arrive at their Assessed Value. Each County calculates this CPR for each property class each year. The CPR compares the Assessed Value to the Real Market Value each year to arrive at this ratio. The CPR for Washington County residential real estate right now is approximately 85%.
Yes it’s a complicated but fair solution.
Wayne Pruner is a Realtor in Tigard Oregon. I am ready to help you save money when you buy or sell your home. My Fast Track Marketing Action Plan only touches on a very small amount of activity that needs to be done to sell your home. I know the Tigard Oregon real estate market and I have been tracking housing data for years. You will only get straight answers and great advice from me. My direct phone number is 503-891-0795 and my email is email@example.com.
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