OREGON PROPERTY TAXES
In Oregon, property taxes help support police, fire protection, education and other services provided by local taxing districts, such as cities, counties, and schools. The amount of property tax you pay is based on two things: 1) the assessed value of your property, and 2) the amount of taxes that each taxing district is authorized to raise. The Oregon constitution places limits on both of these factors. It establishes a Maximum Assessed Value (MAV) and limits the increases of this value. The constitution also places a limit on operating tax rates for most of the taxing districts in the state.
Your Assessment
Property is taxed on its assessed value. A property’s assessed value is the lower of its Real Market Value (RMV) its Maximum Assessed Value. Each year, the county assessor determines the property’s Real Market Value and calculates its Maximum Assessed Value. You are taxed on the lesser of the two, which is called the assessed value. Real Market Value and Maximum Assessed Value are defined below.
Real Market Value (RMV)
Oregon law says the assessor must value all property at 100 percent of its RMV. Real Market value is typically the price your property would sell for in a transaction between a willing buyer and a willing seller on January 1, the assessment date for the tax year. To estimate the initial RMV for your property, your county assessor appraises your property using a physical inspection and a comparison of market data from similar properties. For ensuing tax years, your county assessor may study trends of similar properties to update the RMV for your property. Some property, such as farm or forest property, may be subject to special valuation processes.
Maximum Assessed Value (MAV)
A property’s Maximum Assessed Value (MAV) is the taxable value limit established for each property. The first MAV for each property was set in the 1997–98 tax year. For that year, the MAV was the property’s 1995–96 RMV minus 10 percent. For example, if a residential property had a RMV of $100,000 for the 1995–96 tax year, its 1997–98 MAV would have been $90,000. MAV can increase for only two reasons: a 3 percent annual increase or specific property events.
1. 3% Increase
For tax years after 1997–98, MAV is defined as the greater of the prior year’s MAV or the prior year’s assessed value increased by 3 percent. This means MAV will increase by 3% per year unless the RMV of the property is less than MAV. If this happens, MAV will not increase, or will increase by less than 3%, in the year after RMV first decreases below MAV. Certain property events (explained below), such as new construction, can cause the MAV to increase more than 3%.
2. Property Events
The MAV can increase by more than 3 percent for
any of the following property events:
a. Changes in property value as a result of new property or new improvements to the property,
b. The property is partitioned or subdivided,
c. The property is rezoned and used consistently with rezoning,
d. The property is first taken into account as omitted property, or
e. The property becomes disqualified from exemption, partial exemption or special assessment.
New construction affects MAV if it increases the value of the property by more than $10,000 in any one year or $25,000 within any consecutive five years.
These changes will always have an effect on RMV, although they may not have an effect on MAV.
