With the dramatic downtown in property values in Central Oregon, more and more homeowners are concerned about the effect — or lack thereof — on their property taxes. Many, however, don’t even realize that it’s possible to appeal your taxes –- much less that the process is fairly simple. And, in short, if your property’s market value is less than its assessed value, you might have a case for appealing those taxes.
Trying to explain the process by which your property taxes are calculated, on the other hand, is not so simple. In fact, because of Oregon’s unique tax initiative process (Measure 5 and Measures 47 and 50), it’s next to impossible. To get a sense of just how convoluted Oregon’s taxation process is, check out the Department of Revenue’s “How Property Taxes Work in Oregon” web page.
To become better educated about the process, I attended a class yesterday on how to appeal your property taxes. Guest speakers included well-known local appraiser Dana Bratton, tax attorney (and former state senator) Gene Bryant and real estate attorney Jeremy Green. Below are a few things I learned during the two-hour session:
A Property Tax Primer
To determine whether you should even attempt to appeal your taxes, you’ll need to first understand two basic terms listed on your tax statement: RMV and AV. RMV -– that’s Real Market Value — is the value the assessor has estimated that your property would sell for on the open market as of the assessment date (which, for this tax year, is Jan. 1, 2010). AV -– Assessed Value — is the value used to calculate your tax; it’s the lesser of RMV or MAV. MAV –- which stands for Maximum Assessed Value –- probably won’t appear on your tax statement. It represents the greater of 103 percent of the prior year’s Assessed Value or 100 percent of the prior year’s Maximum Assessed Value.
Confused yet? I was too. It definitely helps if you understand a bit about Measures 47 and 50, which were passed in the mid-‘90s and set limits on how much our property taxes can increase each year. To really grasp how all this works, I recommend you first familiarize yourself with the basics of each measure (here’s the Wikipedia overview of Measures 47 and 50). I’ll warn you, though: This isn’t entertaining reading (but then, what tax-related material is?).
Now that that’s out of the way, let’s assume for a moment you believe you’re being taxed at too high a rate. What happens if you’re successful in your appeal? Here are several scenarios that will result in a tax benefit, as outlined by the Oregon Department of Revenue:
- The Board of Property Tax Appeals reduces the Real Market Value (RMV) of your property below the assessed value currently on the roll.
- Your property has recently been improved and the board reduces the value of the new construction.
- The board reduces the RMV of your property, and the reduction requires property taxes to be reduced to meet constitutional limits on the education and general government categories of your taxes.
Bratton also mentioned several indicators that your property may warrant an appeal:
- New construction (a home built in 2005 or after)
- Properties with a value of $500,000 or more
- Unique properties, which are more difficult to value
- Large sites/vacant buildings
Your First Step
Before you head to the assessor’s office for that petition, however, Bratton suggests that you contact the assessor’s office and ask to meet with them and have your “tax jacket” reviewed with the assessor. In that jacket will be all the information the assessor has gathered regarding your property.
Take a good look –- make sure that all the information related to your property is accurate (is the square footage correct? the number of bedrooms/bathrooms, etc?, the zoning?). If it isn’t, you may well have a case. Also, ask to see the assessor’s appraisal. If that appraisal varies significantly from what you believe to be your property’s value, ask them to explain how they came up with that value. Make sure it was calculated correctly. And if you had an appraisal done somewhere in the vicinity of Jan. 1, 2010 and it’s significantly lower than their appraisal, you definitely have a good chance at an appeal.
In that meeting with the assessor, you just might be able to bypass the appeals process altogether and get your property re-evaluated on the spot. Or, if you get the sense that you should file a petition, Bratton says the assessor’s office will even help you fill out the appeal form (I’ve attached it so you’ll know what to expect).
How the Process Works
You can contact the assessor’s office any time after you’ve received your tax statement in October to request a petition to appeal. Once your petition has been filed, you’ll present your case at an informal hearing before the three-member Board of Property Tax Appeals (BOPTA). This year, the deadline to file your petition is Jan. 3, 2011 (typically, it’s Dec. 31, but that falls on a holiday weekend this year).
Hearings, which last a maximum of 20 minutes each, are held from February through April. If you’re unable or would prefer not to attend the hearing yourself, a relative, a real estate broker, appraiser, accountant or attorney can appear on your behalf, as long as they have written permission. If you choose not to have any representation at the hearing, the board will make a decision based on the evidence you submit with the petition.
When you present your petition to BOPTA, make sure you’re well-prepared. To successfully appeal your property taxes, you’ll need to provide evidence to substantiate your claim that the value the assessor has attached to your property is too high. An appraisal is one good way to do so.
If you don’t want to pay for a full appraisal (about $500), Bratton offers a two-phase “stepped appraisal” for $200. The first “step” is to complete all the research involved (reviewing the property to be appraised and analyzing comparable sales) to determine a possible value range for the subject property. “Then we stop the process before we write an appraisal,” Bratton says; “with the research in hand, we would give you a suggested course of action.”
Providing comparable sales of similar properties is another option (which your Realtor should be able to provide). Bratton suggests printing out a detailed report for each comparable sale rather than presenting a single shorthand report outlining all six in brief. The more thorough your homework, the more likely you are to be successful. By the way, it’s now allowable to use bank-owned properties and short sales as comparable sales because of their prevalence in our market, Bratton says (it didn’t used to be).
One key thing to remember when selecting your comparables: The date the assessor uses to determine the value for this year’s taxes is Jan. 1, 2010. So don’t choose sales from September or October of this year as your evidence because our market is still considered to be in decline — and trying to recalculate backwards to determine a value for that property in January will only muddy the proceedings.
If your appeal to the county BOPTA isn’t successful, you can appeal that decision to the Magistrate Division of the Oregon Tax Court by filing a written complaint, which must be filed within 30 days (not one month) after the board’s order is mailed to you. And if that isn’t successful, you can appeal magistrate decisions to the Regular Division of the Oregon Tax Court (which is a formal proceeding); similarly, you can appeal the decision of the Tax Court to the Oregon Supreme Court.
About the Author:
Lisa Broadwater, GRI, CDPE is a Central Oregon-based real estate professional who specializes in listing and selling homes, especially in Sisters, Tumalo, Redmond and Bend.