Wrinkle
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« Reply #2 on: March 08, 2009, 07:38:14 pm » |
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It's pretty easy to become upset over property taxes (Ad Valorem).
What most do not realize is how fairly the tax is managed by our Assessor, who is pretty much bound by rules in what he and his office does. He does not have much latitude in this regard.
IAC, the way the current laws are written, your property value may increase by some significant amount, yet you are capped to a 5% increase. This would not apply to major improvements made to the property or sales.
But, if your property's value jumped legitimately by, say 20%, your TAXABLE Value would still only increase 5% the next year, then would continue to increase by 5% for the next four years until full valuation is achieved. (apart from future years' changes in real value).
If the following year, your property devalued by 5%, you'd still have a 10% valuation increase in store, which would have to be carried out in two 5% installments over the next two years. So, while your real full value decreased, your taxable value could still increase for a number of years before beginning to decline (assuming the decline held that long as well).
Kind of like turning a container ship.
Governments like this since it all but assures a 5% increase in revenues every year, but also hedges declines in values which would normally affect their revenues negatively.
All in all, it's probably a good way for it to be handled. But, I'd actually favor fixed tax rates where it remains the same as the day it was purchased for as long as one owner owns it. The current method taxes us on increases in value which cannot be realized until sold. In effect, it forces property to turn due to fixed income households not being able to afford these increases. If we want to keep people here, the fixed rate would certainly help.
What could rightly change is the 5% cap rate, down to 3% as is currently being proposed by our state legislature. At least then it's more closely associated with true escalation changes.
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