NBC 29 ran a story on Friday that covered the property reassessment in Fluvanna County. According to the story, the county is preparing residents for an average 40% increase in property assessments for 2007. That’s a 40% tax increase.
About a month ago, I covered this in a post I wrote that attempted to show that increasing property assessments by even 30% would mean that the assessments would now be higher than market value. In light of the fact that with this latest story, Fluvanna seems to be preparing residents for a 40% average increase, I wanted to see how the data would shake out.
I went into the MLS and looked up every property that sold in the month of October in Fluvanna County. I then looked at the current tax assessment for each of those properties, increased the assessment by 40% and compared it to the actual sales price to see if a 40% increase is in line with market value. Here’s what I found:
There were 35 properties that closed in the month of October, 2006. Of those 35 properties, I threw out three of them. One was thrown out because it was completely renovated both inside and out prior to its sale, and the other two were thrown out because they were so new that the assessment only reflected the land value. That left 32 property sales to look at.
Of the 32 sales that I examined, only 6 sold for a value AT OR ABOVE a 40% increase in their current assessments. That means that 80% of the properties sold for BELOW a 40% increase in their current assessments. What does this mean? It means that if the 40% increase in assessments were to go into effect today, 80% of the homes sold in October would be over-taxed. Not good.
My first concern is with the over-taxation. No population at any time, for any reason, should be over-taxed. This is especially true in the case of over-valued assessments, since assessments are something that can be changed. If someone wants to have a debate over the actual tax rate being to high, that’s fine. There is no reason, however, that assessments should be too high. I fully understand that tax-payers have the right to challenge their assessments, but judging by what some people have told me about their previous experiences with challenges, I don’t have a lot of hope that people will have success.
My second concern is that people will attempt to use the tax assessments to value their homes when they want to sell. The government does not set the value of a home, the market does. Tax assessments are supposed to be a reflection of the market, not the other way around. Judging by the little bit of data that I have looked at, most property assessments are going to be above the current market value unless the county experiences tremendous appreciation between now and the time the tax bills go out. I don’t foresee that happening.
The reassessment in Fluvanna County as it is currently being discussed, or not being discussed as the case may be, has the potential to be very bad for residents. At the very least, this is an issue that needs to be addressed and discussed much more at the Board of Supervisors level, and residents should be asking a lot more questions about just how much impact this reassessment is going to have on not only their tax bills, but the financial health of the county as a whole.
I am going to take some time to break down the stats that I gathered a little more, and I will continue to follow the coverage of the issue and try to get some answers from county officials.
Technorati Tags: real estate, realtor, fluvanna, virginia, reassessment, tax, property value
