Assessments, property taxes and shifting market values in Albemarle County

Albemarle County’s real estate assessments are now going to be done annually rather than biennually (contrast that with Nelson County to the south re-assesses every five years).

I just received a call from an appraiser working for the county. He noticed that one of my listings had just been sold for more than the current asking price. This is true – but there is more to the story.

Facts:

– The property is currently on the market for $1,189,000.
– The title was just transferred to the relocation company for $1,259,847 and is currently assessed for $1,000,080 (archived: 2009).
– The assessor is going to value it at $1,011,000.
– Lot sales have shown that the land increased $40k in value and the house came down in value $10,000. Keep in mind that the property has been on the market for about a year.
– All the comparable sales the appraiser used from 2007 were lot sales and there were no resales in this development.

In short – land values increase and the improvements decreased.

The majority of local government’s revenue comes from property taxes, and if governments aren’t able to depend on their annual raises, what are they/we going to do?

Governments don’t budget the way the rest of us do – they determine how much they want and budget for that. And they’re not looking forward to pinching pennies.

For the most part, they are seeing a flat assessment versus the last assessment period. They are seeing reductions here and there as well.

There are already quite a few bills in the General Assembly addressing property taxes. Get ready to read about citizens challenging real estate assessments, perhaps en masse in January 2008.

Update 12/20/2007: From an offline comment, clarifying a statement above:

Please note that I did take a little bit of an issue with the statement that, [g]overnments don’t budget the way the rest of us do –  they determine how much they want and budget for that. This statement, within the context of land/structure values, might leave some readers with the mistaken impression that local governments determine how much money they want, and then determine assessments in a way that the delivers the desired amount  That interpretation, of course, would be wrong since, legally, assessments have to be based on the market value of real property, not the revenue wishes of the local government.  Tax rates, on the other hand, can be changed according to a local government’s needs and wishes but, ultimately, it is the prerogative of the local elected body -“ the Board of Supervisors, in the case of Albemarle County -“ to decide at what level to set the tax rate.  I realize that you’re aware of these points, but I fear that some of your readers might not have a clear understanding of the situation, and might draw an erroneous conclusion.