You probably got your property tax bill in the mail a couple of weeks ago.  If your mortgage payment doesn’t include an impound account to pay your taxes and insurance, in order to get the maximum discount you need pay the bill by November 15th.

This time of year we tend to get a lot of questions regarding property taxes.  In Oregon, the tax year runs from July 1st to June 30th the following year.  The amounts are certified in October and bills are sent out.  The most common question is, “how do my property taxes keep going up if my property values keep going down?”  There are lots of factors that make up the total tax bill including the taxes themselves, voter approved levies and bonds are a few examples.  In the 1990s there were a series of tax reform measures that defined how Oregon property taxes are assessed, including Measure 47.  Measure 47 states that property taxes can not go up more than 3% per year and you’d pay based on the lesser of Assessed Value or Real Market Value.  Taking a very simplified look at the math, here’s what happened:

Assuming the 1996 tax bill was the first under Measure 47 and both the Assessed Value and Real Market Value were $100,000.  Assessed value increases 3% annually and Real Market Value tracks the Case Shiller Index (this is not the true method of tracking RMV but illustrates this example.

In 1997 AV was $103,000 and RMV $106,090.  This trend continues: in 2007, at the peak of the market the Assessed value from the same $100,000 property was $142,476 compared to the RMV of $236,632.  At this point no one was complaining they were paying on the assessed value!

When the market started to decline, so did RMV but the assessed values continued to truck along at 3% per year.  Now, in 2012, the Assessed Value is $160,470 and the RMV is $166,456.  The assessed value is still below the RMV and there’s no real case for an appeal.

If you can show that your market value is below the Assessed Value then you have a case that your taxes should be lower.  There is an appeal process that is unique to each county so do your homework and make sure you follow the process.  Also remember that this is just an illustration of a generalized scenario.