County Assessments up 27%

As forecast, assessments are rising sharply in Albemarle County, but not by the expected 18.7%, which was the 2003 increase, but instead a whopping 27.2%. A good chunk of that increase is coming from the rising value of raw land, though house values have climbed quite a bit, too. The biannual assessments are based on the actual value of homes, and do not reflect any action or decision on the part of the county; they are a product of the free market. Putting a positive spin on things, Lee Catlin says that the increase is a sign of “a very healthy and vibrant economic situation,” but they may just price people right out of their homes. Julie Stavitski has the story in today’s Progress.

17 thoughts on “County Assessments up 27%”

  1. Here we go again. Yet another tax revenue increase without the Board of Supervisors being required to vote for or against it. Can we expect county services to increase by 27%? Since this is the result of “a very healthy and vibrant economic situation,” can we all expect pay increases commensurate with this tax hike? That $40-$50 additional I’ll be paying each month needs to come from somewhere.

    I spoke with somebody in the assessor’s office two years ago when we received the last ridiculous increase, and he pointed out that buying a home in Albemarle is obviously a great investment. That may be true. I have other great investments, but I’m not taxed on them while they’re appreciating in value, only when I cash them in.

    Housing isn’t a luxury, it’s a necessity.

    A far more equitable property taxing system would be something like this:

    When you buy a home, the sale price becomes the assessed value – that’s clearly the fair market value, and neither buyer nor seller can argue against that valuation.

    Every year or every other year, the property is reassessed, and aditional taxes calculated – but not charged to the homeowner. The homeowner continues to pay taxes based on the purchase price. However, if the tax RATE is increased or decreased, that change is passed on as it occurs.

    When the home is sold, the back taxes, based on the increased assessed values, become due with no interest attached. Call it an annualized assessment appreciation tax (that’ll look typical on a closing settlement statement – “AAA tax”). The seller will fold the additional tax into the selling price, so the cost to the homeowner will be relatively painless.

    At the time of sale, the actual purchase price (which will include the back taxes the seller rolled into the price, inflating the value even further) becomes the new assessed value, and the property is taxed at that value until it is next sold.

    Yes, this would mean that the increased taxes from the increased assessments would be deferred, but it wouldn’t result in a decrease in the revenue flow, and after a couple of years as homes sell the increases would start flowing into the county coffers and the BOS can proceed to spend it as discriminately or indiscriminately as they so desire. So the county still gets their cut of our “investments,” but the hardship to the homeowner is vastly reduced.

  2. Al said "I spoke with somebody in the assessor’s office two years ago when we received the last ridiculous increase, and he pointed out that buying a home in Albemarle is obviously a great investment………"

    I don`t know the entire text of this conversation but on the face of it, it is not the assessor`s place to point out "investment returns". Their job remains, I hope, one of a professional attitude towards the job of placing a realistic value on a piece of improved property — not to place value on an investment.

  3. Good point – I couldn’t agree with you more. The assessor came out to our house to hear our appeal and reconsider or assessment (and actually reduced it by 10k, which was nice). Since in our part of the county the lots average an acre or more and none of the homes are very similar (it’s not a cookie-cutter development), it is admittedly a challenge for them to find "comparable" properties upon which to base their evaluations.

    The whole process is somewhat flawed. By focusing on comparables, they often overlook property condition, age, and actual location. And the Board of Equalization, which is the body you appeal assessments to, suffers from a dramatic conflict of interest. It is composed of assessors, realtors, and builders. Now you tell me – who profits from increasing property values more than realtors and builders?? The state recommends that type of board member because of their expertise, but IMHO that expertise is negated by their financial interest in overvaluing properties.

    There has to be a more equitable way to do this.

  4. If you’re paying higher tax rates, you’re making much more money in equity, and you really cant be bitching about a little tax bill. There are people out there who dont have any net worth at all. Consider yourself lucky.

  5. But, an increase in equity is of little value to a homeowner, unless the homeowner decides to convert that equity to cash by selling the property (or using it as loan collateral).

    That’s the difficulty with heavy reliance upon real estate taxes for local revenue. When there’s an inflationary real estate market, the accompanying increases in assessments put economic pressure on people to sell real estate. Much of that land ends up in the hands of developers who will realize the "highest use" of the land and continue the higher assessment spiral.

    If you consider income taxes, unrealized capital gains are not taxable. It’s only when stocks are sold (and real cash gained) that the capital gains become subject to income taxes. So, taxpayers aren’t forced to sell stock that they believe continues to be a good investment in the future, just because they need to generate cash to pay taxes.

    I’d suggest that somebody’s primary residence is, first of all, a home and secondarily, an investment. Taxes shouldn’t pressure folks to sell their homes.

  6. There are people out there who dont have any net worth at all. Consider yourself lucky.

    That may not be the most ignorant thing I’ve read here, because back in the old “anonymous” days there were some amazingly dumb things written here, but this comes pretty close.

    Do you honestly think that people who have acquired enough credit and net worth to purchase a home are simply “lucky?”

    Do you think that people who have worked and saved and managed their lives and their money well enough to qualify for a mortgage did so by chance or fate?

    Do you think Lady Luck jumped out of the crowd one day and said to these people, “You just won the right to purchase a house!” or something like that?

    I can assure you that luck, fortune, and/or hot dice have little if anything to do with it.

    As far as your comment about “If you’re paying higher tax rates, you’re making much more money in equity, and you really cant be bitching about a little tax bill,” you don’t “make” equity, and it’s not something tangible until you sell your property. This tax increase is based on presumed value that doesn’t actually exist until the home is sold.

    Let’s look at that in other terms. Let’s say you have a job. Let’s say you make, oh, $20,000 a year. Well, we know from other people with similar jobs that the odds are excellent you’ll be making at least that much next year. However, before you actually make it, we’d like to tax you on it. Sound like a plan? Or would you prefer to wait until you’ve actually earned the money we want to tax you on?

  7. Not to beat a dead horse in responding to this comment, but

    “If you’re paying higher tax rates, you’re making much more money in equity …

    is simply a false statement. Assessed value and market value are two very different things that are often a point of great confusion for buyers and sellers.


  8. ………who dont have any net worth at all."

    I would really, really like to know what this comment has to do with anything – anything at all.

    Might as well have said " Twas brillig, and the slithy toves Did gyre and gimble in the wabe."

  9. In Charlottesville, market value is consistently higher than assessed value. Thats why the taxes go up so fast.

  10. Yes, you are lucky. Would you rathar your house lost value? Would that be better?

    Money itself is just as intangible as equity. It has no value until you spend it. If you cant afford your tax bill, take out an equity loan to pay for it.

  11. But people can’t live in thier stock portfolio in the mean time. Their stocks don’t place a load on the city infrastructure every day.

    I agree that property taxes are stupid, but they’re obviously worth putting up with since the gains from owning things that appreciate far outweigh the minor annoyance of taxes. Thats why we buy houses in the first place. :)

  12. Taxes go up because the government is spending the money, not because the houses are worth more. In this case the increase in taxes is because the city council does not reduce the tax rate enough to make up for the increased assessments.

  13. First, homes losing value is extraordinarily rare in this country. This is why a home is one of the best, safest investments possible.

    And aside from the interesting idea that money itself isn’t tangible, it’s not a matter of affording the tax bill. That’s not the issue. The issue is the Virginia property taxation system itself. It’s completely out of whack, and it needs fixing. Any taxation system that enables the government to benefit substantially from an increase in taxes that no elected leader has to vote for or against or even express an opinion on is insane.

  14. but the City Council does do the same thing. It is outrageous to have the tax bill on your house go up 27% in one year.

  15. A simple question – with the recent assessments going up so dramatically, where is the new money going to be used? Are the services provided going to be 27% better?

    More schools, new infrastructure, something?


  16. A simple question maybe, but the full answer is sure to be complex, convoluted and confused if it comes from one of the Supervisors or the from one of the County Executive’s staff. I suspect that the first thing they’d do is point a finger at the state because of "unfunded mandates" and the reduction in state funding to localitites. Then they’d mention the increased demand on services due to the increase in population. Bowerman has told me that the new residents have a different concept of government services and they want more services and higher quality ones than has been traditional in Albemarle County. He’s always been ready to make them happy.

    Reductions in state funding, expensive unfunded state mandates and increased costs from population growth are all real and do need to be paid for. The real question is how much more they’ll cost and if that is equal to the increase in revenue. The increased costs are probably not as much as the increase in revenue but the only way to find out is to painstakingly dissect the budget. John Carter used to do that but he has passed away. May he rest in peace.

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