It's property tax assessment time. Here's what homeowners need to know.
Saturday, February 6, 2010
When the envelope arrived, Cindy Branigin said, she closed her eyes and hoped for the best. After nearly 15 years in her Southern Maryland home, the arrival of her property tax assessment had become a gut-wrenching ritual. This time, Branigin said, she was pleasantly surprised. The assessment of her home had dropped by $50,000.
"That is not something you would usually wish for, but it was kind of a relief," she said.
It's that time of year again. Thousands of Washington area homeowners are receiving their property tax assessment notices from their local jurisdictions.
Many homeowners, like Branigin, will see their property tax assessments fall as the housing market continues to suffer. In Maryland, where assessments are rotated among neighborhoods every three years, the average homeowner receiving the current batch of notices saw a 20 percent decline in value since 2006, according to the state's Department of Assessments and Taxation. The average residential assessment has fallen 7.1 percent in Arlington since peaking in 2007, including a 3.25 percent drop in this year's assessment. Property tax assessments were down 2 percent for single-family homes in Falls Church, 10 percent for condominiums.
But the decline can differ by neighborhood and sometimes lags behind the recent deterioration of home values in the region. And for some homeowners, just because the local government decides their home is worth less, that doesn't necessarily mean their tax bill will drop.
A property tax assessment is an estimate of property value based on the value of similar homes nearby. It reflects how much the local government thinks the home would sell for if the owner is not under distress or in a hurry to sell.
Assessments are sometimes confused with real estate appraisals, which are conducted for lenders when someone is attempting to secure a mortgage. But, unlike appraisers, government assessors do not appraise individual houses. Instead, they may look at hundreds of homes in an neighborhood that are close to one another and have similar characteristics. Local tax assessors sometimes survey neighborhoods and track permits for renovations to determine neighborhood values.
The assessment notices are typically mailed around the first of the year, though some localities take a few more months. Fairfax County and the city of Alexandria won't mail notices until later this month. And in Prince William County and the District, assessment notices won't be issued until March.
The goal of the process is to assign reasonable values to properties so that homeowners carry a fair share of their jurisdiction's tax burden.
The valuations are used by local governments to determine their taxable property base and to set a tax set rate that will help cover the cost of the jurisdiction's needs, from schools to road repair. The assessment multiplied by the tax rate (usually expressed in so many dollars per $100 or $1,000 of assessed value) equals the tax bill -- or the out-of-pocket cost for a homeowner.
But the process is complicated, and even if a homeowner's property tax assessment declines, the tax bill may not. In some cases, cash-strapped localities may increase the tax rate to make up for budget shortfalls, and that increase may offset a decrease in the assessed value of the home.
"The real estate tax, unfortunately, is the largest discretionary tax that local governments have to balance their budgets in Virginia," said Thomas Rice, Arlington's director of real estate assessments.