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 The
property tax in Oregon is used for the support of local taxing districts
such as public schools, cities, and counties. Oregon’s property tax
system is one of the most important sources of revenue for the public sector
in Oregon as this source raised nearly $4.5 billion for local governments
in fiscal year 2007-08.
Property subject to taxation includes all privately owned
real property (e.g., land, buildings, and fixed machinery and equipment),
manufactured homes, and personal property used in a business. There is no
property tax on household furnishings; personal belongings and automobiles;
crops; orchards; business inventories; or certain intangible property such
as stocks, bonds, or bank accounts.
Most property used for religious, fraternal, and governmental
purposes is exempt. Reductions in assessments are granted for certain types
of property such as open space, farmland, forestland, and historical buildings.
Properties owned by disabled veterans also are given reduced assessments.
The rate of taxation on property is governed by the needs
of the taxing districts within the constitutional and statutory limits.
For example, the cities in Multnomah County (i.e, Portland) receive about
39 cents of each property tax dollar to pay for police, fire, parks, and
other services. Public schools, community colleges, and special districts,
such as Metro and TriMet, receive 37 cents from each property tax dollar
collected. The county gets the rest which is 24 cents.
The Multnomah County Tax Assessor
administers property taxes for the City of Portland. The City Auditor does
not collect assessments through property taxes and they do not collect property
taxes. Visit the
Oregon Department of Revenue and the
Multnomah County Division of Assessment & Taxation Web sites
for further property tax information.
Terms
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Real Market Value (RMV)
The amount in cash which could reasonably be expected by an informed
seller acting without compulsion, from an informed buyer acting without
compulsion, in an “arms-length” transaction during the period for which
the property is tax.
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Maximum Assessed Value
(MAV) Value of property subject to taxation.
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Taxable Assessed Value
(TAV) The RMV and MAV are compared and a property is taxed
on the lesser value, which is called the Taxable Assessed Value.
Property Assessment
The process of identifying
taxable property and assigning a value to it is termed appraisal. County
assessors appraise most property in Oregon. The
Oregon Department
of Revenue appraises certain large industrial sites and utility property.
Each county assessor prepares their county's assessment roll, which is a
listing of all taxable property as of January 1 of each year.
Utility property is placed on a statewide assessment roll. The department
allocates utility values to the county rolls prior to the preparation of
tax bills.
The county assessor is supposed
to appraise properties at their market value. The total RMV of property
in Oregon was $501.1 billion in 2008. Detached single-family properties
have two components, land and the actual building. Your tax bill will
show both values along with the (MAV).
Trending
The RMV of real property is estimated by a recent sale
of the property or by an appraisal of the property conducted by the county
assessor, or the Oregon Department of Revenue in the case of certain industrial
or centrally assessed property. The appraisal method used depends upon the
nature of the property. Residential property and bare land are most often
appraised by comparing sales of similar property. Income-producing or commercial
property may be valued by more complicated appraisal techniques. Between
reappraisals of property, the RMV of real property may be adjusted each
year based upon sales ratio studies conducted by the assessor to reflect
increases or decreases in the value of different classes of property. This
is called “trending.”
New Homes
New homes (built after 1998), including new lots, are assessed
by multiplying the current RMV times a percentage. For example, in
2008, the ratio applied to new residential property in Multnomah County
was 50.46% of RMV. The percentage is calculated annually for each class
of property and it represents the average ratio of all properties MAV to
RMV. The intent is to provide similar tax savings for new property that
is applied to existing property. In 2007 the percentage was 51.59
and in 2006 the percentage was 56.97. In 2004, the percentage was
62.42.
Note the declining percentage over the years. This
was due to the biggest boom years in real estate values in the Portland
metro area. The RMV of properties in Oregon increased 15.4% from 2006-07
to 2007-08. The highest average price (as well as median price) was
in the summer of 2007. As of the summer of 2009, values have decreased approximately
20 percent from the summer of 2007 based on sales of property as reported
by the Regional Market Listing Service (RMLS). If properties are adjusted
to reflect the declining values of properties in the metro area, the percentage
should start increasing in 2009.
Tax Rates
 Each year in late September or early October, the county
assessor places the taxes certified by the taxing districts on the tax roll.
Property taxes are placed on the tax roll in the form of a rate per $1,000
of assessed value. In most cases, the taxes for operations are the permanent
rate limits certified by the districts. When a district certifies a dollar
amount tax levy, such as a local option tax or bond tax, the assessor must
calculate a tax rate. To compute the tax rate, the tax levy amount is divided
by the taxable assessed value of the district. For example: Green City certifies
a local option tax in the amount of $225,000. The taxable assessed value
of the city is $39,487,000. The rate for the local option tax is calculated
as follows:
tax levy amount / taxable assessed
value = tax rate
$225,000 / $39,487,000 = .0056980
or = $5.6980 per $1,000 of assessed value
This tax rate is placed on the individual property tax
accounts in the city. All the taxable property within the city will have
the same rate for the local option tax. The amount of tax to be paid, of
course, will vary depending on the assessed value of each property.
Individual properties are taxed by the districts that provide services to
that property. For example, a property in Green City would pay taxes to
the city, the county, a school district, and maybe a library district. Property
outside the city would pay taxes to the county, a school district, a rural
fire protection district, and maybe a library district, but not to the city.
Some properties are subject to assessments of a special taxing district.
An example would be a drainage district that assesses on a per acre basis.
These qualifying assessments also are placed on the tax roll.
The total amount of tax placed on a property is computed by multiplying
the property's assessed value by the combined tax rates of all the districts
in which it is located and then adding any assessments.
Taxable Value Limitations
Over the years, Oregonians have approved three measures
that affect property taxes. Measure 50 has had the most impact on
the ways property taxes are collected in the state. Below is a brief
summary of each measure:
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1990 - Measure 5: This measure limited tax rates
to $15 per $1,000 of market value. Still in effect when assessed, or
taxable, values are close to market values.
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1996 - Measure 47: A key provision took assessed
values for each property back to 1995, cut that figure by ten percent,
then allowed taxable values to rise by three percent a year going forward.
Allowed exceptions for tax levies approved in a November general election
in even-numbered years or by half of registered voters at other times.
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1997 - Measure 50: Clean-up measure drafted
by the Legislature that clarified and implemented Measure 47.
Exempted urban renewal taxes and Portland's police and fire pension
and disability levy from the cuts.
Taxable Value Limitation: Measure 50
The Oregon Constitution limits the rate of growth of property
value subject to taxation. The limit is based on a property's Maximum Assessed
Value (MAV). The MAV was established for all property in existence in 1997-98
by a formula described in the constitutional amendment, Measure 50. MAV
for new property is computed using a different formula also contained in
the constitution.
MAV is allowed to increase each year by no more than three (3) percent.
There are exceptions to this limit, however. The addition of a new structure,
major improvement of an existing structure, and subdivision or partition
of the property are examples of exceptions that would increase MAV by more
than 3 percent.
Each year the MAV and RMV for each property are figured. The property is
then taxed on the lesser value, which is called the Taxable Assessed Value
(TAV).
The below chart shows the Average Assessed Value and
Real Market Value in Multnomah County where Portland is located. As the
market value of homes since the summer of 2007 have been declining, the
chart shows that the spread is beginning to narrow between the two
values (note that market values are calculated as of January 1, based on
sales in the previous year. Drops in value in 2009, for example, won’t
be reflected in the tax statements until October 2010). In 2009
the difference was 50% and in 2010 the spread was 60%. The
assessed value in 2010 was $174,390 and the market value was $288,725.
You can see the it will take a drastic decrease in RMV before the two
values equal. Should that ever occur it will mean that property taxes
have to decrease.
Tax Limitation (Compression): Measure 5 Limits
The Oregon Constitution also sets limits on the amount
of property taxes that can be collected from each property tax account.
These limits are often called the "Measure 5 limits." To figure these limits,
taxes are divided into categories described in the constitution. The categories
are: education, general government, and non-limited, which is usually general
obligation bonds. The limits are $5 per $1,000 of RMV for education taxes
and $10 per $1,000 of RMV for general government taxes. RMV is defined
by law as the lowest amount a property would sell for during the assessment
year.
Measure 47
This 1996 measure pegged a
home's assessed value back to the level in 1995, cut that value by ten percent,
then capped its growth at three percent a year. This measure did not
call for a reassessment when a home sold. Neither did Measure 50.
This was also a measure that amended the state constitution.
Summary
Below is a step-by-step summary of how the Oregon property
tax system works. We have ignored Measures 5 and 47 to make it easier
to understand.
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Property is assessed at
the Real Market Value.
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The Real Market Value
is compared to the property's Maximum Assessed Value. The Maximum Assessed
Value is allowed to increase each year by no more than three (3) percent.
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Each year the MAV and
RMV are figured. The property is then taxed on the lesser value, which
is called the Taxable Assessed Value (TAV).
Visit
Portland Maps
to view a property's tax. Just insert a Portland address and the first
page will give both the Market Value and the Assessed Value of the property.
Clicking on "Assessor" will provide the details of the property tax.
A Broken System of Property Taxes in Oregon
 In October of 2007 the
Willamette Week ran a story
about two families, the Meyers and Sallos who live on opposite sides of
Portland—and on the unequal ends of Oregon’s property-tax divide. Their
two households had much in common. Both were headed by young professionals.
Erica Meyers is a business manager at Wilson High School; husband Dan is
an architect-in-training. Sol Sallos is a merchandise manager at Nike. Christine,
his wife, is a part-time masseuse. Both families bought a home in 2006 for
roughly the same price. The Meyers’ Craftsman bungalow at the heart of the
Northeast Alberta Street arts district cost $369,000. The Sallos’ two-story
home in the Southwest Hills cost just a bit more, $380,000. That’s where
the similarities end. When their property-tax bills show up in the mail,
they were treated with Oregon’s version of discriminatory tax tyranny. The
Meyers household was taxed $1,734. The Sallos family’s bill: $6,356. Two
houses, purchased for roughly the same price in the same year. Yet one’s
property-tax bill was more than 3 1/2 times larger than the other.
How can this happen? Because assessed values are stuck
in 1995, when one home was still a low-income neighborhood, the property
was assessed at just $79,510. The other home in the Southwest Hills, where
values were already high in the ’90s, was assessed at $291,910. Rates rise
just 3 percent a year, even though the real value of the home in the low-income
neighborhood grew far faster and is now equal to the Southwest Hills home.
It started when voters in 1990 agreed to limit the amount
of tax homeowners pay to $15 for every $1,000 their property was worth.
The initiative—called Measure 5—sought to restrain government but allow
taxes to grow with the economy, measured by the value of property. It was
a sensible proposal and it had the added benefit of equalizing school funding
for rich and poor districts. It passed with 53 percent of the vote.
But tax activists weren’t satisfied with Measure 5, because
a property’s value could still skyrocket. They argued you had to strap down
the value of the home for tax purposes—in other words, limit the growth
in what’s called the assessed value (see above explanation of MAV). So Measure
47 was put on the ballot and it passed. It didn’t change the tax rate. It
just rolled back the assessed value of all property to their 1995 levels,
minus 10 percent. And it reached into the future, saying assessed values
of property can grow no more than three (3) percent a year.
One year later, the Legislature tinkered with Measure 47
just enough to make the law workable, and its new version, Measure 50, passed
in 1997. Ten years later, when Oregon was enjoying a booming real-estate
market—and a property-tax system mangled by three measures, the system revealed
it unfairness. All because Oregon’s base property values are forever frozen
in 1995.
Here is what the Willamette Week had to say about Oregon
property tax system back in 2007:
You don’t need to be a progressive to think our
property tax system stinks. You can think government ought to have less
dough, or the same amount. It’s still appalling. Why? Because real estate
doesn’t all increase in value at the same rate. Yet our system limits
the increase, for tax purposes, to 3 percent a year no matter what.
Consider neighborhoods along Mississippi and Alberta,
in Boise-Eliot and elsewhere. Due to rapid gentrification, they’ve seen
property values shoot up like the price of a Hannah Montana ticket.
Yet our tax system makes no room for changes in real-world values, and
taxes in those neighborhoods are a steal because they still reflect
1995 prices.
Meanwhile, folks in Northwest, on Sauvie Island,
in outer East Portland and in the West Hills pay the highest property
taxes in the city compared with what their homes are really worth.
Depending where you live, your home could be assessed
at 25 percent of its real market value, or 70 percent. And that disparity
will continue to grow wider as the years pass and real prices drift
ever further from their 1995 levels.
Net Result of the Above Measures
The net result is that Portland, along with the rest of
the state, remains suspended in the 1995 time period when it comes to property
taxes. This means that neighborhoods and areas within Portland have
many disparities for homes of equal value. Overall, outer east and
some areas of outer Southwest Portland have the highest taxes in the city.
Relatively low taxes are scattered in pockets throughout the city but mostly
come in North and inner Northeast, where the 1996 reassessment fell by the
wayside with the adoption of Measure 50.
The Oregonian published
the below figures in early September 2005. They will help you determine
taxable values (i.e., assessed values) compared with estimated market values
by Zip Code:
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70% to 80%: 97201,
97229, 97230, 97236.
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60% to 70%: 97206, 97210,
97216, 97219, 97220, 97221, 97231, 97233, 97239, 97266.
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50% to 60%: 97202,
97203, 97212, 97213, 97214, 97215, 97218, 97227,
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40% to 50%: 97211,
97217.
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Below 30%: 97232.
Looking at the Zip Codes above, the highest percentages
of assessed value to market value are in newer communities. For example,
in Zip Code 97229 is the Forest Heights neighborhood in Northwest Portland
where most of the homes have been built within the last ten years. The same
situation exists for Zip Code 97230 which is located in Parkrose, an outer
eastside neighborhood. The Oregon property tax system penalizes new home
owners as they pay more property taxes than do homeowners who live in older
homes of comparable values.
The High Tax and Low Tax Neighborhoods
Multnomah County divides its property-tax map into neighborhood
districts. For low residential property taxes, records show the best neighborhood
for cheap property taxes is No. 163 in inner Northeast Portland—a rectangle
bordered by Northeast Killingsworth Street, North Williams Street, Northeast
Fremont Street and I-5. On average, homes there are assessed at 24 percent
of their real market value, the lowest rate in the county. The neighborhoods
in this area are Piedmont, Woodlawn, Humboldt, King, and Boise.
The highest residential property taxes are in No. 83, an
L-shaped neighborhood in Northeast Portland bordering 148th Avenue, Halsey
Street, 160th Avenue and the Banfield Expressway. On average, homes there
are assessed at 70 percent of their real market value due to their relatively
slow appreciation since 1995.
Should you desire to test the above, go to the
Search for a Home for Sale by Neighborhood tool and find a home in the
Woodlawn (low tax area) neighborhood and a home in the Wilkes (high tax
area) neighborhood − both should be approximately
the same price. The taxes will be displayed on the listings. Or go to
Portland Maps
and insert the address of each to find the property tax for each property.
Note the market value and assessed value of each −
to be accurate, the market values of both properties should be approximately
the same assuming each seller is asking a realistic price for their property.
The assessed values of each property most likely will show a wide disparity
and thus the property tax will also.
Another Inequity
Another inequity occurs when
a home sells for significantly more than the RMV that the appraiser has
placed on the property. Taxes are often not reassessed when a home sells
for significantly more than the RMV. For example, a home sells for between
$500,000 - 600,000 but have a tax assessed value of just $350,000. Therefore,
the taxes are calculated on the $350,000 amount. What makes it unfair is
that a house across the street may have a much lower market value but will
pay approximately the same property tax.
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