TAXATION - VALUATION PROCESS

WHAT CAUSES PROPERTY VALUES TO CHANGE?

Many things can cause the market value of your property to change. The most obvious cause would be a change in the property itself. The addition of a bedroom, garage or swimming pool or the destruction or loss of property caused by flood or fire would have an immediate impact on your property value.   A change in value caused by either of these events may be mitigated in the taxpayers' favor by applying for an exemption or refund.

The most frequent cause of a change in the value is a change in the marketplace.

If a town's major industry leaves, property values can collapse. As decaying neighborhoods with good housing stock are discovered by young home buyers, prices gradually rise, and then may soar as the neighborhood becomes fashionable.

A shortage of detached houses in a desirable city neighborhood can send prices up.  In a recession, larger homes may stay on the market longer and sell for less, but more affordable homes may be in demand, so their prices rise.  In a stable neighborhood, with no extraordinary pressure from the market, inflation may cause increases or decreases in property value.

Four basic economic factors affect property value:

• Physical (including Environmental and Locational) Factors.
• Economic Factors (including jobs, income, lending, foreclosures, etc)
• Governmental (including Political and Legal) Factors
• Social Factors (including fads, crime, and population characteristics)

The factors above are used in neighborhood analysis, which is an essential component in the valuation of real property.   To most real estate and appraisal professionals, the three most important physical factors affecting market value are:

1. LOCATION
2. LOCATION
3. LOCATION

All other factors are either less important or are considered only according to their relationship to location.

VALUATION

Buyers and sellers in the market CREATE VALUE

The Assessor's office studies the market and collects information about properties to ESTIMATE VALUE.

All appraisals, whether a mass appraisal or an individual appraisal, are the professional opinion of the appraiser or appraisers who made the appraisal. 

The Assessor's office, rather than creating market values, merely reflects the market value as of a point in time, i.e. January 1 of each year.

How is my property appraised?

TAXATION

• Taxpayers DEMAND SERVICES.
• Taxing authorities REQUIRE MONEY to provide those services.

• Taxing authorities such as school districts, park districts and city councils LEVY TAXES to cover their budget.

The ASSESSOR then:

• DETERMINES THE VALUE of all taxable property
• CALCULATES THE TAX LIMITS for each district and the TOTAL TAX LEVY to whcih they are entitled, cutting any that exceed the allowable limits.
• CALCULATES THE TAX RATE necessary to collect the taxes to pay for the services demanded by the taxpayers. (Total TAXES LEVIED ÷ Total TAXABLE VALUE)
• CALCULATES THE TAX for each individual (TAX RATE X VALUE of the individual's property)

The TREASURER then:

• SENDS THE TAX BILL to each taxpayer,
• COLLECTS TAXES from each taxpayer, and
• DELIVERS TAX TO EACH DISTRICT based upon their proportionate share of each tax bill collected..

If you are concerned about rising taxes:

• Attend budget hearings
• Call or write the taxing authorities
• Decide whether you are willing to do without services to keep taxes low
• Work for efficiency in government

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