And it’s impact on a Board of Property Tax Appeal

Real Market Value (RMV) is the market value of the property. It represents what the property would likely sell for as of January 1, 2016 (the assessment date). Given that values have declined over the last year the Real Market Value as of 1/1/16 was higher than it is today. For a sale occurring after 1/1/16 the price paid must be adjusted upward to reflect the higher value on 1/1/16.

Maximum Assessed Value (MAV) was created in 1997 when Measure 50 was voted into law. It was first computed by taking the 1995 Real Market Value and subtracting 10%. Unless there is new construction on the property the MAV increases by law 3% per year. The assessor’s office cannot change the MAV due to declines in the real estate values. This value is not directly labeled as the Maximum Assessed Value on your tax bill.

Assessed Value (AV) is the lower of the Real Market Value or the Maximum Assessed Value. Your tax is calculated based on the Assessed Value.

EXAMPLE #1 – Your tax bill indicates a Real Market Value of $200,000 for your property. The Assessed Value is based on an MAV of $150,000. During the appeal hearing before the Board of Property Tax Appeals (BOPTA) you present several sales in your neighborhood as evidence that your value should be reduced to $175,000. The BOPTA board agrees and makes the reduction. The values before and after the appeal adjustment are shown below.

The RMV was reduced due to the appeal. The MAV is not affected by the appeal. The lower number is still the MAV of $150,000. The Assessed Value remains $150,000. Since the tax is based on the AV which did not change, the tax remains the same. Here, only if the RMV falls below the MAV will the AV be reduced, thus allowing a reduction in the amount of tax.

EXAMPLE #2 – Your tax bill indicates a Real Market Value of $200,000 for your property. The Assessed Value is based on an MAV of $185,000. During the appeal hearing you provide the BOPTA board evidence that your Real Market Value should be $175,000. The BOPTA board agrees and makes the reduction. The values before and after the appeal adjustment are shown below.

In Example #2, the reduction of RMV to $175,000 now makes it lower than the MAV of $185,000. Since the lower of the RMV and MAV is now $175,000, it becomes the new Assessed Value. The lower AV in
turn lowers the tax as the tax is based on the AV.

Under the Oregon Constitution and Measure 50, properties with similar RMV’s can have very different MAV’s, even in the same subdivision. Similarly, two property owners with the same Real Market Value can each pay a different amount of tax. This is not a problem the BOPTA board can resolve. The evidence presented to the BOPTA board should relate to the value of the property and not the amount of tax. If the board reduces a value and it results in a decrease in the Assessed Value the tax will then be reduced.

When making your presentation at the BOPTA hearing focus on the Real Market Value of the property. This is the information that the board needs to make a decision. Provide information relating to sales of comparable properties. In addition, the more similar the sales are to your property and the closer those sales occurred to January 1, 2015, the better chance your case will succeed.