Dear Claire: How are Property Taxes Calculated in Oregon?
Demystifying Oregon Property Taxes and How They Impact You
With Oregon property taxes, the first thing you should know is that most of the money we spend on social services, police, pensions for all our government employees, etc., are all paid for by our property taxes. And our property taxes can be very confusing. Back in the day, we passed several measures, including Measure 5, Measure 50, and Measure 47, which all affected property taxes.
What you need to know so that you can avoid paying more taxes than you have to is that taxes are actually assessed on the assessed value of the home. Let’s say you are in the city of Portland. If you go to the city of Portland website, which is www.portlandmaps.com, you’ll see the assessor detail and in that assessor detail if you click on it, you’ll see real market value and then you’ll see tax assessed value. Those two things are totally different. We used to assess taxes on market value, but now we assess taxes on assessed value. You’re going to notice that both of those figures are very, very different. You could see a $400,000 difference between the assessed value and the real market value.
A lot of times when people are new to Oregon, they may say, “Well, this says my assessed value is only $100,000 and the price I’m paying for this house is six times that, is that okay?”
For practical purposes, you should know that in terms of the market value vs. the assessed value, there is no rhyme or reason to it. There are a bunch of overlays that were put on in the 90’s and that is where they started assessing the tax assessed value. Also, those values could only go up 3% a year.
For example, if you had a house in 1997 that was only worth $120,000, your assessed value would be even less than that and that could only go up by 3%. Because of that, there are areas of Portland where the same type of house in same price range, the assessed value and the property taxes annually are going to be very different. So it’s something I always advise buyers to watch for because it’s going to affect your monthly payment pretty significantly. There isn’t much you can do to change it once it’s been assessed.
What you want to know if you own property is, “How do I avoid increasing my property taxes?” Right? If you pulled permits and you’re doing a significant remodel, that can increase your property taxes. I’ve had plenty of clients call me and say, “You know, Claire, I don’t want to move, I love this neighborhood, but my house is too small. I’m going to blow the roof off and add a thousand square feet to the footprint.”
If you add square footage to your house it’s going to reassess your property taxes, and it’s going to be a significant increase. Another thing that changes them significantly or used to … they just put a stay on this … is converting your basement or any other room, like your garage, anything like that to an accessory dwelling unit or an ADU as we call them can also change your property taxes pretty significantly.
There’s also a few things you should know about If you’re a homeowner from the perspective of keeping your taxes down. If you’re in a certain age bracket, which is mostly for the elderly, you can typically get your property taxes postponed. In essence, what the city and the county does is when you apply for it is say, “All right, you’re not going to pay your property taxes until you pass away and your heirs, when they sell the house, will have to pay us back and there will be some interest assessed on that outstanding bill.”
It’s something to keep in mind and is a great way to keep people as they age in their homes without having to worry about changing their expenses, especially on a fixed income. Additionally, Metro and the city and the county have different areas of town that were assessed specifically to encourage home ownership or to encourage improvements on a property. Those are often called Urban Renewal Programs, depending on what parts of the city it’s located in.
If you have questions about this, just give me a call because they’re very specific and they’re not easily identifiable. In those neighborhoods, the property taxes are artificially low, so that’s another way to get you into a home that might be a little bit more affordable than it would be otherwise.
I’m trying to think if there’s anything else == this is kind of your ‘crash course’ in property taxes. There’s a lot to understand and there’s a lot more as far as how they are assessed and where they are assessed. It gets very complicated very quickly, however, I also have the contact information for the tax assessor’s office.
If you have any specific questions, I’m happy to get you resources where you can find out the answer. And of course, thank you always for tuning in, if you have any other real estate questions you’d like me to address, comment below or just reach out. I’ll be happy to chat. Remember to subscribe to our Paris Group Realty LLC YouTube channel for easy access to additional information than what we have here. I hope you have a wonderful day. Take Care.
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