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Property Tax Assessment Limits

Property Tax Assessment Limits. David L. Sjoquist. Georgia Municipal Association Revenue and Finance Committee Meetig January 25, 2009 Atlanta, Georgia. HR 1. Limits increases in assessed value Lesser of 3% or inflation rate Applies only to real property

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Property Tax Assessment Limits

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  1. Property Tax Assessment Limits David L. Sjoquist Georgia Municipal Association Revenue and Finance Committee Meetig January 25, 2009 Atlanta, Georgia

  2. HR 1 • Limits increases in assessed value • Lesser of 3% or inflation rate • Applies only to real property • Applies to both residential & nonresidential

  3. HR 1 • Start with valuation for 2010 • Additions or improvements added at FMV • Property that is sold or transferred • Implemented by general law • Correct factual errors in valuation

  4. HR 1 • Existing floating homestead exemptions • Columbus-Muscogee • Millage rate cap

  5. Issues • Treatment of centrally assessed property • 3% becomes the annual target • Transfer or sale of property • What if market values fall?

  6. Example 1 2010 AV = $100,000 2015 AV = $115,000 2015 AV-FMV = $125,000 2016 AV-FMV = $121,000 2016 AV = $118,450 (=$115,000 + 3%)

  7. Example 2 2010 AV = $100,000 2015 AV = $115,000 2016 AV-FMV = $110,000 2017 AV-FMV = $121,000 What assessed value to use: $118,450 (=$115,000 + 3%) or $113,300 (=$110,000 + 3%)

  8. Implications • Reduce the growth in the base • Growth in property values • New construction • Turnover of property

  9. Estimated Property Tax Base Reduction (2005 to 2007)

  10. Real Property Assessment Differential (Florida)

  11. Implications • Local Government Budget • Higher millage rates • Cut services • Find alternative revenue sources • Look to the state -- strings attached • Changes the distribution of the tax burden • New owners • Frequent movers • Slow appreciating property

  12. Example

  13. Example

  14. Implications • Lock In Effect • Owners with substantial tax savings • are reluctant to move

  15. Benefits/Appeal • Predictable Tax Levies • Ability to pay • Revenue Stability

  16. Assessment Limits: 20 states Differ by: Coverage (all but 4 are statewide) Eligible property Parcel value vs. aggregate assessment (all but 2 are parcel based) Treatment upon sale (most limits removed on sale) Allowable increase

  17. Thank you QUESTIONS?

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