June is the month when new (and possibly higher) real estate valuations usually arrive from the local county assessor’s office. If you received a notice of valuation change or are otherwise wondering what you can do about the assessment of your property, this article is for you.
Just because the total valuation of a taxing entity’s property goes up does not necessarily mean that taxes you pay will go up. This is up to each board or taxing entity to determine. Recently, ag land values are declining due to lower sales values and residential and commercial properties are going up because sales prices are increasing.
Statewide, county assessors are required to assess all real property subject to taxation on Jan. 1 of each year. This assessment is multiplied by the tax levies of all taxing political subdivisions as determined by the county Board of Equalization in order to arrive at the property tax due as of Dec. 31.
One of the key duties of the county assessor is to establish and maintain fair and equitable value on all real property within the county so that all real property is assessed uniformly and proportionately.
All nonexempt real estate (except agricultural land, which is valued at 75% of actual value) is to be assessed at “actual value,” which means the market value in the ordinary course of trade. Actual value may be determined using a number of methods, such as a sales comparison approach, income approach and cost approach. Actual value is to be the most probable price that a property would bring if sold in the open market. In other words, would you sell the property for the appraised value?
By June 1, county assessors mail notice to the owner of any property if the property assessment has changed from the previous year.
A property owner disagreeing with either a new assessment or an assessment carried over from the prior year may file a written protest with the county Board of Equalization on or before June 30 (Property Tax Valuation Protest Form 422).
Between June 1 and July 25, the county board will conduct hearings and decide on protests. On or before Aug. 2, the county clerk will mail written notice of the board’s decision to the protesting owner.
An owner that remains dissatisfied with the decision of the board may file an appeal with the Tax Equalization and Review Commission (TERC), which consists of four commissioners appointed by the governor. TERC will hold an evidentiary hearing. The burden is on the property owner to show that the action of the board was both incorrect and either unreasonable or arbitrary.
Tax rates are established as a result of a local budgetary process. Each governmental agency provides a budget that will cover the cost of maintaining its respective agency for a fiscal year. The budget requirements are totaled and that amount is divided by the total assessed value of property for that taxing entity to establish the tax rate. The tax rate is stated as a percent or amount due for each $100 of assessed value.
Will you pay more or less in property tax if your valuation changes? If a taxing entity did not increase spending over the previous year and your property declined in value, you should pay less tax; if your property increased in value, you would pay more.
During the 2019 legislative session, I supported a new law designed to safeguard against increasing county budgets due to aggregate property valuation changes and make the process of setting a property tax request more transparent.
LB103 requires political subdivisions such as counties and school districts to hold a public hearing if the annual assessment of property within a political subdivision would result in an increase in the total amount of taxes levied using the previous year’s tax levy. That levy will decrease so that the political subdivision’s property tax request is no more than in the previous year.
If the governing body wishes to increase its property tax request, it may do so only after holding a public hearing and by passing a resolution or ordinance. The required hearing notice will include the percentage increase or decrease in valuation, property tax rate and total operating budget from the prior year to the current year.
If you are interested in protesting your property tax valuation, contact your county assessor. Your written protest must be filed by June 30. Homestead Exemption applications must also be filed annually by June 30.
If you have any legislative concerns you would like to discuss, please feel free to contact me or my legislative staff.