Real Estate Tax Assessments… Look Out for a Change
By Jeff Scott –
Realtors often find that property owners are unfamiliar with how North Carolina handles ad valorem (real estate) taxes. This has the potential to cause bad feelings with owners as well as unrealistic expectations of property values.
It would be great if all municipalities throughout the country assessed property the same way, but that is just not the case. Owners cannot be blamed for not knowing how property is assessed in North Carolina since close to half of all Outer Banks property owners are from out of state. Moreover, probably half of all local residents moved here from another state and don’t understand our tax laws either. Since both Dare and Currituck counties will soon be reassessing real estate, this subject is important and timely.
The last time Both Dare and Currituck counties assessed property was in 2005. This was the peak of our market and the current assessments are at the 2005 value. Since 2005, the annual number of sales transactions through the Outer Banks multiple listing service has been about half of that boom year.
Values have been greatly affected. Today Realtors often hear from owners, “Since market value is lower why haven’t the assessments been lowered?” Reassessments every year or two must be very common in the municipalities where these owners come from. Also it only makes sense to pay taxes on what a property is worth that particular year.
State law in North Carolina, however, allows municipalities to wait up to eight years before they have to reassess. This means that new tax assessments will be coming out sometime between now and the first quarter of 2013.
What should owners expect on their new tax assessment? In almost every case the new property assessment will be much closer to the market value on January 1, 2013, than the current assessment. In determining values, the tax department looks at all arm’s length transactions and compares some features buyers favor to all similar properties.
One thing that is uniform among municipalities is that they don’t always get values right. The tax assessor may not know about some new upgrades to a property or if the floor plan will be popular with buyers. However, these folks do a great job with the information they have and the number of properties they have to reassess. Dare County alone has over 40,000 properties to assess! Perhaps that’s one reason why it has been so long since the last assessment.
It’s been over 20 years since local counties have been in a similar situation. Dare County’s assessment in 1990 was at the beginning of the last big recession that affected Outer Banks property values. It was not until 1998 that tax values became close to market value again. Realtors are looking forward to these assessments being closer to reality.
If you own property on the Outer Banks and want to check the new tax assessed value against real market value, just call a Realtor. Most Realtors will be happy to take a quick look at your property and give you an idea of current market value.