Here’s an informative story by Susan Voyles over at the Reno Gazette Journal as to why tax bills will continue to rise even as values go down, particularly in hard-hit areas such as Spanish Springs, Stead and the North Valleys. read
I'm Your Guy!
775-722-4011
smarten
I understand GreenNV has stated “there is no impending property tax bomb. In spite of assessed value, your property tax bill can only go up 3% annually.”
But if this is the case, why then the need to reappraise all 169K parcels in the County on a yearly basis? Assessed valuation would only become relevant then if it fell!
RJ, CPA
By new assessments constantly, a new owner of any particular property would start out at a higher base value figure, upon which his taxes and the 3% cap would be measured. He would not be able to tack onto an old and prior assessment, which would abate taxes for him based upon stale numbers. So the taxing authority creates a constantly increasing valuation base by regular and recurring assessments. That way, a smaller total of tax dollars is abated under a 3% cap program. It is a method of belittling the value of the cap program, actually.
smarten
So RJ, how then would Nevada’s property tax methodology differ from California’s Proposition 13?
In California a new owner’s acquisition price becomes the property’s assessed valuation. Then each year that valuation increases by a cost of living component NTE 2%.
Initially a California owner’s assessed valuation was rolled back to what it was in 1976. It sounds to me from your description that in essence that happened last year in Nevada. Am I understanding correctly?
If the two real property taxation systems [California and Nevada] are now essentially the same, why does that former assemblywoman from Reno continue to attempt to put California’s version on the ballot as a proposed amendment to Nevada’s Constitution? It would seem to me there’s no need.
Or stated differently, the fact she continues tells me the two systems are different.
Tom
Smarten,
There are a couple of interesting differences. California’s would require a super-majority to make a change, akin to a constitutional amendment to change it, set up now to require a 2/3rds vote. Also, the limitation is more severe, whereas Nevada allows a 3% increase in taxes.
Nevada’s system is a statutory cap, so that another legislature could change it — much less of a comfort level than requiring what amounts to a constitutional amendment.
Also, California’s system is an absolute limitation on the tax. Nevada’s is merely an abatement, meaning it is still floating out there and it is on the books, it just isn’t collected. Another legislature could modify the abatement, possibly make it (prospectively) into a due on sale deferral, for example.
In short, they are similar in effect, with one (California) imposing a more strict limitation than the other, about 150% of the Nevada annual increase limitation, and also it is grounded on a more solid footing than the Nevada version, which actually could be discarded by legislative mandate at any time.
But the Nevada method is still much better than none at all. I am glad it was enacted. It is always politically tough to drop such a system once in force, so maybe it will stick.
Possibly the state legislator you mentioned would like to have the more rigid and more reliable Prop. 13 version enacted. I’m for that!
Another interesting difference is that the California version will stick the new buyer with his own purchase price to set his base value, whereas the Nevada version will instead use the latest set of base value determination factors for the area, i.e., appraisal for the property during the most recent appraisal, soon to be annually. That should help if your client is buying the higher-end priced property in a neighborhood–he isn’t stuck with his own new purchase price so much as is the new Califoria buyer. There is a bit of averaging which may be helpful to him, because the formulation in Nevada will look to other factors, such as comps in the neighborhood during the appraisal process, and not just the buyer’s purchase price. Should work inversely if the buyer is purchasing the lower-end house in a neighborhood, though.
Interesting little projections to run when thinking about a home purchase.
smarten
Thanks Tom –
Just for clarification you indicated “California…would require a super-majority to make a change, akin to a constitutional amendment to change it, set up now to require a 2/3rds vote.”
I don’t think that’s technically an accurate statement. Prop. 13 CAN be amended by as little as a 50.1% vote. In fact this took place in 2000 when Prop. 55 was adopted with far less than a 2/3 vote. Prop. 55, as you may remember changed the required passage rate for new school/community college infrastructure bonds from 2/3 to 55%. Notwithstanding, the required 2/3rds passage rate remains for OTHER types of bonds [such as those for libraries, hospitals, etc.] as well as for special taxes of all kinds.
There’s an interesting RGJ editorial in today’s newspaper on the anamoly the subject of this thread. In part, the RGJ’s editorial board acknowledges how terribly complicated Nevada’s property tax system is and how very few people actually understand how it works.
In California when property values decline to levels lower than last year’s assessed valuations, assessed valuations [and the taxes computed thereon] drop as well. However once property values appreciate, temporarily reduced assessed valuations are restored. As a practical matter, the ONLY property owners who benefit in California [at least property tax wise] as a result of temporary reductions in assessed valuations are those who purchased recently at the height of a boom.