Falling Taxes on Real Estate in Southern Oregon

This is a reply or clarification from my standpoint on the article that came out in today’s (Oct 4, 2011) Mail Tribune as the front page story. I generally like to link to stories that I refer to, but the Mail Tribune decided that they are charging people to read the online version of their stories, and I can’t condone that decision.

The basics of the story are that property taxes should drop for 37% of Jackson County houses. I just went back over my old Blog posts, and realize that I don’t believe I have answered the question about how property taxes work in the state of Oregon.

The county computes 2 different values for a property. There is a value that is the Maximum Assessed Value (MAV), and a 2nd one that is the (theoretical) Real Market Value(RMV) . Now the RMV is generally off 90% of the time. I don’t really know how they come up with that number. The MAV however is what one pays taxes on. That value is fixed at the point in time that the house is constructed, or a major remodel is completed that significantly changes the value of the home. From that point in time, that value can only increase at 3% per year. Now while real estate was appreciating at a rate of greater than 3% a year, there became a pretty wider discrepancy between the MAV and the RMV.

Now that we have just gotten into our 5 straight year of depreciation though, the chances of a house’s RMV being lower than the MAV has become a reality. Especially for homes that were built after 2002.

I’ll give you some examples…

My home has a MAV of $143,500 and a RMV of $206,000. Now if I were to sell it today, I would get probably somewhere over $250,000. So my taxes will not be affected. My house was built in 1948, and it’s MAV will probably never be under the RMV.

On the other hand…after a quick search of the MLS, I found a house in Eagle Point that was built in 2005, sold in the last couple of months as and REO for $299,000. The county shows the MAV is $327,000 and the RMV is 395,000. The buyer of this property should be able to take their sale down to the assessors office, and have the value of that property changed. And that change should reduce their taxes by  close to $300 a year or so.

Now one more example…I am in the process of selling a house at this time that has a MAV $35,000 over what the accepted sales price is. It is a lower end, first time home buyer kind of a house. Now when getting a loan on a house like this, sometimes the ratio of payments to income is close. And the difference of $30 on a monthly payment could be the difference as to whether or not a buyer could get that loan. Under the new price, the taxes on this house should decrease by close to $500 per year. A Realtor who is representing their buyer should know these figures…and if getting the loan would be achieved easier by getting the taxed assessed value to go through…that would be the kind of problem solving that is needed in today’s market.

If it isn’t required for the loan, then at the very least they should recommend to their client to take the steps necessary to reduce their taxes.

It is easy to start. The Assessors office is on the 2nd floor in the County building on Oakdale in Medford. I have managed to have a person there to talk to within a minute every time I have visited that office.

Okay…sorry for the long post…I was trying to get a lot of information across. As always, when looking for property in Jackson County, Medford and Ashland, come talk to me. One of the best reasons to have a Realtor on your side is having someone who has that knowledge base. I sometime go into teacher mode a little strong….but I can certainly help you with the process.