Property tax discounts and refunds

Posted by Matt

I read an article in the Oregonian over the weekend suggesting that I take another look at my property tax statement(s). The author suggested that the county assessor's office does occasionally make a mistake, and it might be worth a little quick math. In our area, the assessed value of a home is not allowed to increase by more than 3% per year unless something has happened to obviously increase the value (like a remodel).

So, I hauled out the page full of numbers and got the calculator going. Here's how the numbers crunched:

Land value: +5%
Structure value: +29.7%
Total Real Market Value: 17.5%
Taxable Assessed Value: +9.2%

I almost let myself start getting excited about the possibility of an overpayment and refund, as was mentioned in the article. I called up the tax office for an explanation only to hear that the numbers were correct. The assessments actually take place in January, so our 2006 numbers were determined when our house was only 90% finished. (We moved in at the beginning of February.) Their other reminder was that property taxes increase for more than just assessed value (as was mentioned in the article). Most of the increase we saw this year came from extras like bond measures.

The article offered us one other bit of consolation:

The only sure-deal way to shave your property taxes is an easy one that's been around for years: Pay the whole bill by Nov. 15 and you'll get a 3 percent discount, guaranteed. If you pay in installments, you lose out.

Our property tax payment is made out of the escrow account for our mortgage, and the title company made the payment in plenty of time to save us the $132.22.

One other side note on property taxes: there are situations where it makes sense to pay your property taxes yourself instead of through escrow. If you hang onto the tax money until it becomes due and put it into a safe investment, you can earn a return on it all year long. However, most lenders require tax escrow until you reach a threshold level of equity or payment history. This is fine for most people anyway, as it helps to level out their budget and makes the tax payment (and discount) automatic.