Nevada Real Estate Owners Bracing Themselves For Property Tax Hikes
Most Lyon County, Nev., property owners can expect to see an increase in their assessed valuations of land (real property) for the upcoming 2007-08 tax roll to be published in December.
However, those significantly increased assessed valuations won’t mean owners’ property taxes will go up as much as it might appear, due to the 2005 Nevada Legislature-approved AB 489 (tax abatement bill), which placed a cap on the annual tax increase for property owners.
For owners of owner-occupied residential property, the cap is set at 3 percent annually (from one year to next), while there is an 8 percent cap on other properties, including commercial real estate and rental property, according to the Reno Gazette-Journal.
Usually the Assessor’s office reassesses property every fifth year, with the county divided into five geographical areas (Mason Valley this year), and it uses what it calls factoring to represent assessed valuation increases in other areas.
By statute, Nevada Assessors must submit previous year sales of land for the State Division of Assessment Standards to evaluate the various areas within each county, to determine where assessed values are in relation to market prices.
The 2005 sales were submitted in April for analysis, the Lyon Assessor’s Office reported, but only returned by the state last month.
The market figures studied for 2005, though, show the rapid growth of the Nevada housing market, not the downturn in real estate seen this year in volume of sales. Since the 2005 values are used for the assessed value figures property owners will soon receive in notices with a large bump in values represented in most.
Assessor Mike Glass stressed that current vacant land sales are used to determine assessed valuations used by an appraiser and those record-breaking 2005 sales show they are out of the accepted ratio of tolerances used set by state law in some cases.
“We always play catch-up,” said Glass of comparisons of market values based on sales and assessed value, since prior years are used.
And now due to the AB 489 law, tax bills won’t reflect the huge increases (in tax charge) that might have been seen by some properties. The law ended the direct correlation between assessed valuation (defined as 35 percent of the total appraised value) and taxes, and that gap will only widen if an assessment value continues to rise.
As Nevada mortgage costs continue to soar with each passing year, property tax bills are of increasing concern to residents. Numerous areas of the county showed market spikes that threw the Assessor’s values way out of prescribed tolerances and must have value adjustments made for 2007-08, either by re-evaluation or factoring of land values.