One of the questions I am frequently asked, particularly by home buyers moving to the area or 2nd home buyers, is “How are property taxes calculated?” My answer is usually, “It’s complicated.” Initially, it can be difficult to understand how Deschutes County property taxes are calculated. There’s the assessed value, maximum assessed value, real market value, and of course Measure 50. Factor in the wild swings in market values over the last 8 years or so and things get even more complicated. We can now thank Deschutes County for this fantastic video that explains how property taxes are calculated. I mean it, it’s great! Take a look for yourself.
You might want to read this summary of how property taxes are calculated as a supplement to the video. Let’s start with some definitions.
Base appraisal date: Properties are valued/appraised as of the January 1st directly proceeding the fiscal tax year.
Real Market Value: The amount in cash that could reasonably be expected to be paid by an informed buyer to an informed seller.
Assessed Value: The lower of the property’s real market value or the property’s maximum assessed value.
Maximum Assessed Value: The maximum assessed value shall equal 103 percent of the property’s assessed value from the prior year or 100 percent of the property’s maximum assessed value from the prior year whichever is greater.
Now on to Measure 50, which was passed by Oregon voters in 1997. At that time, the Maximum Assessed Value (MAV) of every property was reduced to 90 percent of its 1995-96 Real Market Value (RMV). Generally, the annual increase in your Assessed Value (or taxable value) is limited by Measure 50 to 3% unless there have been changes made to your property such as new construction or a partition. The Assessor compares the Real Market Value (RMV) to the Maximum Assessed Value (MAV). The lower of these two values is your Assessed Value, or taxable value.
For new property (e.g., newly constructed homes), when a home is completed, it receives its RMV and MAV. Again, the assessed value is the lower of the two. The MAV is calculated by multiplying the new property’s RMV by the ratio of AV to RMV of similar property. For example, if the ratio of AV to RMV for residential property in a given county is 0.8, then the AV for a new house would be 80 percent of its RMV. (Confused yet???)
For more information about how property taxes are calculated in Bend and the rest of Deschutes County, visit the Deschutes County website.