Wednesday, September 27, 2017 / by David Mcduffee
It’s that time of year again when you’re about to get your annual property tax statement. They can be confusing, but they have information on them that’s important to understand. This is also the statement you provide your tax professional if you are eligible to deduct the property tax from your federal income taxes. One of the many benefits of home ownership.
Your tax statement is mailed out in October, and they are due by 11/15/2017. You may choose to pay in full by that date and receive a 3% discount, or 2/3 of the amount and receive a 2% discount, or 1/3 of the full amount with the other two installments due 2/15 and 5/15. This statement covers the tax period from 7/1/2017 to 6/30/2018, so some of the tax covers months already past and some covers months yet to come.
You will get a yellow tax statement if you set up a tax impound account when you purchased your home. This means you don’t have to pay the tax assessor directly. It will be paid out of your impound account automatically and will receive the full 3% discount. If you get a green statement, you do have to pay the tax assessment department directly, as your taxes have not been withheld monthly with your payment.
Property taxes in Oregon are based on maximum assessed value, not the real market value of your home. Maximum assessed value is generally always lower than real market value. Real market value is set every January 1st and is based on what a buyer is willing to pay a seller for a property in your area.
Maximum assessed value is based on 1995-1996 value due to Measure 5, a property tax limitation measure that was passed by Oregon voters. New construction is an exception to this, because the value is based on a changed property ratio. The assessed value is generally still lower than real market value, but higher than resale homes measured by the 1995-1996 assessed value. I know, it boggles the mind. Your taxes can only be increased by 3% a year unless there is a triggering event increasing the value of your home in one year by an amount of $10,000, or $25,000 over five sequential years. The passage of a special bond levy for schools, parks, or other improvements for a specified amount of time can also increase the tax amount by more than 3%. Tax amounts are based on an assigned rate per $1000 of assessed value.
There are many different tax districts within the tri-county area, and they all have different tax rates per thousand. The heart of the Multnomah County may have a tax rate of $23 per thousand, and rural Clackamas County may have a rate as low as $13 per thousand.
This is a very simplified explanation of a complicated subject. This should not be considered accounting or tax advice, and you should always contact the tax assessor’s office or your tax professional.