Wayne and Mary Taylor have a million-dollar problem with their house.

The Taylors' rambling home in Raleigh's Cameron Park neighborhood, bought for $28,000 in 1968, recently got a tax assessment from Wake County of $1,050,150.

Like many older residents of the Triangle's sought-after traditional neighborhoods, the Taylors don't consider a sky-high evaluation to be good news, signaling a windfall if they sell. For some homeowners who want to stay put, it means a stressfully high tax bill.

"I want to live here," said Wayne Taylor, 76, a professor emeritus in the design school at N.C. State University. "The process is all out of whack."

People such as the Taylors say they're paying for their foresighted move into neighborhoods that were affordable in the 1960s and '70s and, because of their historic value and proximity to downtown, are eagerly sought and comparatively high-priced. The Taylors' $28,000 purchase price would equate to about $168,000 in 2007 dollars.

The situation affects older and disabled homeowners in vacation areas on the coast and in the mountains, state revenue officials say. It's also occurring in hot neighborhoods in Raleigh and Durham, where property was reassessed this year; Orange County's turn comes next year.

"We have a significant amount of our population that has been in their homes for 25 to 30 years and have seen huge appreciation in their homes over that entire period," said Ken Joyner, tax administrator for Durham County.

A state homestead exemption law has helped ease the tax burden for more than 4,000 Triangle homeowners older than 65 or with disabilities, but it has an income cap. Until August, it applied to households that made $20,500 a year or less. The legislature increased the cap, to $25,000 for the 2008 tax year, with more increases likely.

$16.5 million change

That change will make nearly 37,000 homeowners eligible statewide for the break and cost cities and counties about $16.5 million in 2008 revenue they otherwise would have reaped, according to state revenue figures. In Wake County, tax officials expect to give the tax break to an additional 1,000 older or disabled residents next year.

"There are definitely some inside the Beltline," said Emmett Curl, Wake County revenue director.

Still, advocates for older people said, that's hardly enough to reach all older people whose homes may now seem like more of a liability than an asset.

"If you have two people who are each making $18,000, you are just out of luck," said Bill Wilson, an associate state director for AARP.

Tax officials say periodic revaluations make sure that all property owners pay their share for services, based on what their homes are worth.

As home prices in trendy neighborhoods have climbed, the mix of residents has changed. When the Taylors moved to Cameron Park, the area's appeal rested on a mix of older people, young families, renters and students, said Mary Taylor, 78, who retired from Legal Services in 1994. Many were affiliated with N.C. State or held government jobs downtown.

"It was wholesome," she said. "It was lively -- the typical neighborhood that people dream about."

Newer Cameron Park residents are nice people with an interest in the neighborhood, Mary Taylor said, but often have higher incomes and a different lifestyle from many longtime residents.

The Taylors' home -- more than 4,700 square feet on less than a half acre -- was last assessed at $404,000 in 2004, producing their current tax bill of $4,523. That's more money than Wayne Taylor's salary when he started at N.C. State.

There may be some relief next year when the county commissioners set the actual tax rate. But even if the rate declines, the Taylors expect their tax bill to go up more than $1,000.

"Even if the rate goes down, the total amount of taxes goes up because they assessed it so high," Wayne Taylor said.

Added Mary: "It would be a hardship."

Pain in Five Points

Allen Taylor, 64 -- no relation to the Cameron Park Taylors -- bought his 1,328-square-foot house in Five Points in 1975 for $21,900. That's $85,000 in today's dollars.

Because Wake County says the house is now worth $394,000 -- nearly $300 per square foot -- Allen Taylor worries that he and his wife may have to sell sooner rather than later.

"We are eventually, through the tax situation, going to be run out of our property," he said.

With his wife a few years from retirement at Rex Healthcare, Allen Taylor says the likely rise in property taxes could put the couple in a deep hole. They'd be hard pressed to make the improvements that would help their house sell at top price to finance their retirement.

"We are not in the position to fight City Hall, on one side, or do a lot of the stuff that has to be done, on the other," Taylor said.

Allen and Andrea Taylor's house has problems, including a bathroom so small that "you'd fall in there and never hit the floor," he said.

However, in red-hot neighborhoods such as Five Points or Durham's Trinity Park-- where assessments went up an average of 63 percent -- it's common for values to have doubled, as the Allen Taylors' did, since the last round.

"We are going to be pretty hard hit by this," Allen Taylor said. "Our house has been perfect for two people without children."

Both Wayne Taylor and Allen Taylor contested the values assigned to their homes the last time around but weren't successful. Neither will try again.

"I don't mind paying taxes, but I don't like for it to be disguised this way," Wayne Taylor said, maintaining that the county is overvaluing property to bring in more revenue.

Mary Taylor doesn't think their house would bring the value attached to it by Wake County. Two smaller houses on their street sold for $637,500 and $801,500 during the past 18 months.

"In the next assessment, if it's too high, we'd have to think about moving away," Mary Taylor said. "We've lived here and raised our four children here. We'd like to be able to leave it, God willing, to our children."