What’s your home worth?
Half of Orange County property owners will see a tax increase this year, and half will have their taxes cut. Which half will you be in? The county’s revaluation process will determine the winners and losers.
Orange County is finishing reappraisals of every land parcel in its boundaries. Counties are required to revalue properties at least every eight years so everyone is treated fairly and equally. Over time, some neighborhoods increase in value faster than others. The goal of a revaluation is to adjust for that so taxes are based on current market values.
The last time this was done was just before the recession hit. This revaluation’s goal is to find the market value as of Jan. 1, 2017.
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As you can imagine, this is a big job. There are over 54,000 parcels in Orange County. To tackle the project, the appraisal is handled differently than the one you got from the bank when you bought your home, or refinanced. The county uses a mass-appraisal approach, in which groups of similar properties (like neighborhoods) are evaluated first. Then, adjustments are made to individual properties.
Here’s how it works. In order to be as accurate as possible, cards were sent to all property owners last year asking for corrections to the information the tax office has on file. Things like, are the number of the bedrooms, square footage, lot size correct? Appraisals can only be as good as the data used to conduct them.
Then property sales are analyzed. Sales made on the open market (the more recent, the better) indicate how the market values property. The appraiser then uses sales of comparable properties to estimate changes in value.
At the end of this process, each parcel will get a new valuation.
What if you don’t agree with the tax office’s valuation? There’s a procedure to handle that. First, you can request a meeting with a county appraiser to explain why you think they’re wrong. They can, and do, make adjustments. If you’re not satisfied, you can present your case to the Board of Equalization and Review, which is made up of local citizens. Finally, you can actually appeal to a state board.
Appealing a valuation is something you can do yourself, although some people hire a private appraiser to get a second opinion. Should you choose to try, it’s important to have facts. The county provides a guide to the appraisal rules, which includes values of different features. If the information the county has about your house is wrong, let them know. Or, find other sales that you think are more like your home, and show why they should be used. The county also provides a list of all the sales that can be used for comparison.
Once the new values are set, the state has one more requirement to keep the process fair. The tax rate has to be adjusted (usually downward), so the new total county tax base after revaluation ends up taking in the same taxes as the previous year. This prevents counties from having any incentive to increase values to get more tax revenue. It really doesn’t matter what the valuation shows to the county, because the total taxes don’t change.
The taxes for each property however, do not stay the same. Here’s where the winners and losers come in. If your home’s value increased more than average (normally a good thing), your taxes will go up when the tax rate is adjusted. Similarly, if your value declined or was below average, your taxes will actually decrease. Only if you’re at the average, will you see no change.
One final point, because of the strengthening economy, businesses are very worried that their new valuations will all far exceed the average. The resulting tax increases will make it even harder for them to compete with neighbors. It will also make it harder for our economic development efforts to attract new businesses.
Will their fears pan out? Will you end up with a higher or lower bill? We’ll all know sometime this month, when the new valuations arrive in your mailbox.
Mark Zimmerman owns a home and real estate business in Chapel Hill. He can be reached at firstname.lastname@example.org