Real Property Tax Explanation for Oregon

The Oregonian’s Brent Hunsberger wrote a good article over the weekend outlining Oregon’s confusing property tax rules.  What makes things difficult for homeowners to understand is why their property taxes rise even when their home value declines.  Brent does a good job of explaining:

“…tax bills will go up even though real market values declined again as of January 2011, the date of record for valuations, and were down at least 20 percent from their peak in 2008.

You can thank Oregon’s tax system for that.

In the ’90s, Oregon voters passed two constitutional amendments limiting growth in property taxes. One essentially divorced real market values from so-called assessed values. The lower value is used to calculate the taxes you owe.

The second amendment in 1997 capped property tax increases to 3 percent a year, though it exempted remodeling, new additions and new voter-approved levies from that cap. That measure also cut tax bills overall.

Market values skyrocketed after that while assessed values bumped up at a more modest rate. By 2008, real market values across the state were 86 percent higher than assessed values, according to the Oregon Department of Revenue. And though market values have declined since then, they still remain about one-third higher than assessed values in Portland’s urban counties. “