What a property reappraisal means to you

July 13, 2009

Dear Rod,

FACTS:

Davidson County properties are reappraised every 4 years (Most recent: 1/1/09)
Residential properties are assessed on 25% of the appraised value. Commercial = 40%
2008 Certified Tax Rate: $4.69 per $100 of assessed value
2009 Certified Tax Rate: $4.13 per $100 of assessed value
Even though your recent property appraisal increased, your 2009 taxes may or may NOT...
I can explain!!!

Mayor Dean has already stated that he will not raise property taxes in Davidson County this year . BUT you may be wondering what exactly it means considering your recent Metro property appraisal / assessment more than likely increased from its 2005 value.

First, by state law, Metro cannot increase the Property Tax Income “BASE” by increasing the property values (as an aggregate). By this it means that the new Certified Tax Rate adjusted down according to the overall “new” aggregate values of all properties in the county…

Clear as mud? Well, here’s how it works:

EXAMPLE:

$200,000 Residential Property Value (2005-2008): Your 2008 taxes were $2345.

New 2009 Value = $230,000 (15% increase): Your 2009 taxes will be $2375

Calculation Method: $230,000 x 25% = $57,500 (assessed value) x .0413 (new certified rate) = $2375

Basically if your property’s new appraised value went up 15% or less, you’ll likely have a tax decrease or no change at all. If it went up more than 15%, you’ll have a tax increase but not as much as you may have first thought.. Of course it depends on the area of town your property is located... Location! Location! Location!

As always, my goal is to be your complete real estate resource. If you have any questions, please do not hesitate to email, call or text.

Sincerely,
Brian Taylor

Comment: I received this today from a local realtor. I am simply reposting this to help educate. I hear many people who are confused about the effect of a property reappraisal. They either do not understand or do not want to understand. A reappraisal does not mean you will have a property tax increase. On a local chat group I belong to, many people decry property reappraisals and many complain that in a period of declining property values that we should not have a reappraisal. Unfortunately, some anti-tax advocates demigod the issue and add to the confusion. Brain does a good job of explaining how a reappraisal works so rather than compose my own explanation, I am simply reposting his.

Reappraisals are necessary for "equalization." If your property was previously of equal value to a property in another part of town but your property went down in value while that other property went up in value then you should pay less property tax than the owner of that other property. The only way to determine that is by a reappraisal.

Another reason we have to have regular reappraisals is because a lot of state dollars, especially state money to support education is distributed by a formula that includes the local "ability to pay." To equalize educational opportunity across the state, poor counties get more state funding than more affluent counties. Until sometimes in the 70's there was no state supervision of the appraisal process and there was an incentive for counties to keep appraisals low. The poorer a county appeared, the more state funding they received. Since the 70's property appraisals are supervised by the state and the people who work for the tax assessors office have to be trained professionals who appraise property at fair market value.

Everyone likes to complain about taxes, and I am generally an advocate of low taxes. Nevertheless, the truth matters and property reappraisals are fair and necessary. If you have a valid reason to think the county overvalued your property, there is an appeals process. Unless you have comparable sales to show your property was overvalued however, you are probably wasting your time in appealing. It is my experience that most tax appraisals are still a little on the low side despite the requirement that they be appraised at fair market value.

Often a reappraisal is used as an opportunity for a local governing body to slip in a tax increase. Immediately after adopting a new "certified tax rate" as required by state law, the county commission or city council will immediately, often in the same meeting, turn around and increase the tax rate. The new tax rate is often the same as the old tax rate before adopting the new "certified tax rate." When elected officials do this they can claim they did not vote to increase the tax rate and may technically be telling the truth depending on how they word their claim. Most people don't know enough about how thing really work in order to challenge their elected representative on this claim. These elected officials will let the public think that the tax increase was due to the recent reappraisal. I applaud Mayor Dean for not pledging not to raise taxes this year.

If you do have a property tax increase due to the reappraisal, it is because your wealth increased; it is because your property increased in value more than the average property. If that is the case, you are fortunate and you want get much sympathy from me.

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