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June 11, 2010

Reassessing property values

Most households pay property taxes either directly as homeowners or indirectly as renters. In the last couple of years property values in most localities have fallen. Has there then been a corresponding drop in property taxes?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"It depends on the property reassessment schedule. In most states and indeed including North Carolina your property -- like your home, let's say -- is not reassessed every year. In fact, in North Carolina it is done only every 8 years. Then that value is held constant until the next reassessment. So your property tax payments aren't going to change unless the rate is changed.

"And because we have had such a rollercoaster in real estate values -- up dramatically in the 2000s and, of course, down in the last two or three years -- it really depends on when the county reassessed your property in terms of whether that has been good or bad for revenues for the county.

"For example, counties that reassessed -- oh, let’s say 3 or 4 years ago at the peak of the real estate market, they have actually been lucky in terms of revenues because they assessed at a time when property values where high and sort of locked those values in for the subsequent 8 years.

"In contrast, counties that are reassessing now or reassessed in the last couple of years are going to lock in those lower values for the future.

"So this has been a real tricky thing, and it really depends on where a county has been on that 8-year cycle as to whether property values have helped or hurt their budget."

Posted by deeshore at June 11, 2010 08:42 AM