With the economy and property values spiraling downward, many Lyon County residents are questioning why their property tax bills keep going up.
Faced with this question during a recent County Commission meeting, Lyon County Assessor Mike Glass explained the reasoning behind this apparent contradiction. NewsDesk will do its best to correctly pass this information on to its readers.......
Faced with skyrocketing property values and the accompanying public outcry over the correlating property tax increases, in 2005, the Nevada State Legislature passed a law to provide property tax relief. Assembly Bill 489, signed into law on April 6, 2005, provides a partial abatement of taxes by applying a 3% cap on the amount the taxes can be annually increased on the owner’s primary residence.
(There is a higher cap of 8% on the tax bill of other properties. Some rental dwellings may also qualify for a 3% cap on the tax bill. The only property that will not be subject to a tax cap will be property that is new to the tax roll this year such as new parcels and/or new construction and parcels with a change in use. In regards to this story, we will stick to the basic 3-percent cap)
The cap means that even if your property value might have increased more than 3-percent, your tax bill could not increase more than 3-percent.
According to Glass, between 2004-06 some property values in Lyon County increased 100-percent or more.
“I reduced land values 50-percent in Fernley and 25-percent for the rest of the county (this past year); however, between 2004 and now property values have maybe gone up 100-percent, so even though I lowered them 50-percent, the 3-percent per year hasn’t caught up to that reduction.”
In the past, when land values were going up, Glass said the County was way behind with what was happening in the market and, of course, nobody complained.
The reason taxes keep going up is the valuation from appraisals are still far higher than what their starting point was in 2004-05. That value is taxed at 3-percent and even though the property values in Fernley have been lowered by 50-percent, they haven’t lowered to that level yet.
When a property’s assessed value equals the 3-percent increase or lower, property taxes will stay even or go down.
Actual appraisal values are set by statute and are the same in each county. Two separate books are kept - what you actually pay taxes on and what the actual market value shows.
Glass further explained, “We don’t operate in real time, (operate on a fiscal year July 1-June 30) so we have to analyze the sales of the prior year up until almost November before we can solidify those values. So, to summarize that, the values went up so high that even though they are now going down and I’ve reduced them, they haven’t gone down to the level of the 3-percent increase per year.”
Glass said that about 80-percent of all sales in Lyon County are currently foreclosure sales and are actually becoming the market value; however “When I see a sale, I can’t just run out and change that value. It’s a fiscal year and I have to wait until I see what all the sales are doing in every district to make those adjustments.”
Glass said, at this point, it looks like another countywide land reduction will be forthcoming, with Fernley being in the worst situation. He said he might have to put obsolescence on the improvement values to get values within state guidelines.
The state audits each county to assure assessments are within a certain percentage of what the market is doing. They can’t be too high (over market) or too low, or the state will come in and tell them to fit the valuations into the proper range.
The tax bills that just went out in July 2009 were based on values that were determined and put in place last November (2008) from the sales that occurred 18 months prior to that. According to Glass, the assessors statewide are always working on a 12 to 18 month lag on what is happening in the market.
He added, “The tax cap has doubled our work load, tripled our headaches.”
County properties are assessed via a mass appraisal and all property owners must be treated the same.
General Information regarding assessment policies: (Copied from the Lyon County website)
Assessed Value: The property value determined by the Assessor and used by the Treasurer to calculate a tax amount. The method of determining the assessed value is specified in Nevada tax law (NRS 361) and by regulations from the Nevada Department of Taxation. The assessed value is 35% of the taxable value of the property.
All counties within the State of Nevada are required to use the cost approach to value real properties for taxation purposes. Nevada Revised Statute (N.R.S.) 361.227 requires the Assessor to establish the "taxable value" by determining the "full cash value" of the land and adding to that the estimated replacement cost of improvements (buildings, etc.) less appropriate depreciation. The replacement cost of the improvements is determined by using Marshall Valuation Service as required by Nevada Administrative Code. The appropriate depreciation, for real property is one and one-half (1.5) percent of replacement cost for each year of age of the structure(s).
The Assessor is also required by statute (N.R.S. 361.260) to determine the taxable value for all real property subject to taxation each year. The statute requires the Assessor to reappraise each real property at least once every five years. In the interim four years we must and do use factors as directed by the Nevada Department of Assessment Standards (D.O.A.S.) which is overseen by the Nevada Tax Commission (N.T.C.).
Information from AB 489 – Partial content of the LCB summary:
Legislative Counsel’s Digest:
Section 1 of Article 10 of the Nevada Constitution requires the Legislature to provide by law for a uniform and equal rate of assessment and taxation of property. That provision, however, authorizes the Legislature to provide by law for an abatement of the tax upon, or an exemption of, part of the assessed value of a single-family residence occupied by the owner to the extent necessary to avoid severe economic hardship to the owner of the residence.
Under this bill, the Legislature declares that an increase in the tax bill of a homeowner of more than 3 percent from the previous year constitutes such a severe economic hardship for purposes of the Nevada Constitution. If such an economic hardship occurs, this bill provides for a partial abatement of the taxes of the homeowner who would otherwise experience the hardship. The effect of the abatement is to reduce the amount of the property taxes owed on the property to not more than 3 percent more than the amount levied or which would have been levied in the immediately preceding fiscal year if not for any applicable exemptions. This abatement does not apply to property for which there was no assessed valuation separately established for the immediately preceding fiscal year or to property for which a greater abatement is applicable.
This bill further provides that notwithstanding the limitations on the increase in property taxes, if the taxable value of any property decreases by 15 percent or more from its taxable value determined as of July 1, 2003, and subsequently increases by 15 percent or more during any fiscal year determined on or after July 1, 2005, the amount of the taxes that were lost as the result of the prior decrease in value may be recaptured by the taxing entity over a 3-year period. However, the taxing entity may only recapture taxes resulting from the taxable property assessed at an amount which is below the taxable value determined as of July 1, 2003. The limitations on increases in property taxes apply to any amount attributable to increases in the taxable value above the taxable value determined as of July 1, 2003. Any amount of taxes that are recaptured are paid without any penalty or interest.
