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The following information regarding property tax is brought to you as a public service by the lawyers of the State of Oregon. The material presented is general legal information intended to alert you to possible legal problems and solutions.
Measure 50, referred to as the "cut and cap" measure, passed by the Oregon voters in 1997, changed Oregon’s property tax system dramatically. Taxes imposed upon real estate are calculated by applying a tax rate limit to the assessed value of a taxpayer’s real property. The tax rate is permanent with the exception of certain bonds measures specifically passed by the voters in the district. As will be explained, the assessed value to which the tax rate is applied may or may not equal real market value – the value the real property could be sold on the open market. Additionally, the assessed value of real property faces annual growth limits of three percent. That is, with some exceptions, your assessed value for the current tax year should be no more than three percent higher than last year’s assessed value.
In determining the assessed value of real property for the current tax year, the assessor must determine two values: one, the real market value and, two, the maximum assessed value. The county assessor is required to utilize the lower of the two values as the assessed value of the real property as of January 1 of each year.
The real market value of real property is estimated by a recent sale of the property or by an appraisal of the property conducted by the county assessor, or the Department of Revenue in the case of certain industrial property. The method of appraisal utilized depends upon the nature of the property. Residential property and bare land are most often appraised by use of sales of similar property. Income-producing or commercial property may be valued by more complicated appraisal techniques. Between reappraisals of property, the real market value of real property may be adjusted each year based upon sales ratio studies conducted by the assessor to reflect increases or decreases in the value of different classes of property. This is called trending. As a taxpayer, you will receive notice of any change in the real market value of your real property on your tax statement.
With some exceptions, the maximum assessed value of real property can be no more than three percent higher than last year’s assessed value. If real property was not in existence the previous year -- say, for example, a new house is built or property is rezoned or subdivided – the maximum assessed value of newly constructed property is determined by multiplying the real market value of the property by a ratio of the average maximum assessed value over the average real market value of all property located in the same area and within the same property class.
In no event, may the assessed value of your real property appearing on your property tax statement exceed the property’s real market value. The market value is the price at which the property could be sold on the open market between a willing buyer and a willing seller. Therefore, if you just purchased your property and your purchase price was below the assessed value, or if, for other reasons, you believe your property has been overassessed, you should take the following steps:
First, discuss the valuation with your county assessor’s office after you get your tax statement. This not required to protect your appeal rights, but the assessor may unilaterally reduce the assessed value on the tax roll if presented with persuasive evidence that the assessed value is incorrect. Additionally, you should review the appraisal records on file with the county assessor. These are public records to which you cannot be denied access. Review the appraisal records on your property to determine if any errors appear, such as wrong square footage or the wrong number of bedrooms, bathrooms or fireplaces. Errors in appraisal records do occur and are seldom discovered by taxpayers.
If your assessed value was trended upward based upon a ratio study of sales of property similar to your own, ask to review the study. You can verify the sale prices of the other properties, and the properties themselves, to determine whether they are truly comparable to yours. Factors to consider are zoning, location, lot size, street frontage, depth of lot, sewer and utility hookups. This information is a matter of public record, also, and can be obtained from the county assessor’s office or the county recorder’s office. Most real estate companies also keep a record of all recent sales in the area and will have information concerning the condition of the properties sold.
Second, if you believe the assessed value of your property is incorrect, you may appeal to the County Board of Property Tax Appeals, formerly known as the Board of Equalization. The petition form can be obtained from your County Board, the assessor’s office, or the office of the county clerk. The deadline for appealing the assessed value of real property is December 31st. Your appeal rights beyond the County Board of Property Tax Appeals may be lost with respect to the tax year in question if you do not properly file a timely appeal to the Board of Property Tax Appeals. Certain industrial property owners whose property is assessed by the Oregon Department of Revenue, may file directly with the Magistrate Division of the Oregon Tax Court without filing with the Board of Property Tax Appeals. Likewise, these appeals must be filed no later than December 31st.
You may choose to make a personal appearance before the Board of Property Tax Appeals, or submit the written information with your petition. From a practical standpoint, the chance of a favorable result from the Board is increased tremendously if you personally appear at the Board hearing. Also, you may have a representative such as a licensed appraiser, or lawyer, assist you in the presentation of your evidence.
Whether you choose to appear or not to appear at the proceeding before the Board of Property Tax Appeals, you must submit evidence to support your opinion as to the value of your property. This evidence could include an independent appraisal report, a comparison of your property with similar properties and the sale prices of those properties, or the recent purchase price of your property. The Board of Property Tax Appeals must consider your evidence and the evidence submitted by the county assessor to determine if the assessed value placed on the tax rolls should be reduced for the current year. The Board does not have the authority to increase the assessed value on the tax rolls. You will be notified of the Board’s decision by mail.
Third, if you are not satisfied with the assessed value determined by the Board of Property Tax Appeals, you may appeal the Board’s decision to the Magistrate Division of the Oregon Tax Court. If the assessed value of a parcel of land is not in excess of $250,000, or the assessed value of the improvement on a parcel of land is not in excess of $250,000, or the assessed value of land and improvement are not in excess of $250,000, you can appeal to the Small Claims Division of the Oregon Tax Court. In the Small Claims Division of the Tax Court the taxpayer may in lieu of a hearing, have the property appraised by an independent fee appraiser appointed by one of the Tax Court magistrates. The taxpayer must pay a reasonable fee for the appraisal and the appraisal shall constitute the real market or specially assessed value of the property. There are no appeal rights from the Small Claims Division.
Whether you chose to proceed to the Magistrate Division or the Small Claims Division of the Tax Court, your appeal must be filed within 30 days (not one month) of the date of mailing of the notice of the Board’s order to the taxpayer.
Small Claims trials are informal and usually held by telephone or in the county in which the property is located. You will be notified of the date and time of the trial.
For appeals to the Magistrate Division, first, you will be notified of a Case Management meeting with the Magistrate and the county assessor to discuss when the trial in the Magistrate Division should be scheduled or if you want to consider mediation before a hearing is held. This initial meeting is by telephone. Mediation is a formal settlement discussion with the county assessor presided over by one of the magistrates. If mediation is unsuccessful, a hearing will be held by telephone or in the Magistrate’s hearing room in Salem, Oregon. Hearings before the Magistrate Division are informal. You may represent yourself or choose to be represented by an attorney, accountant, licensed tax consultant, or licensed real estate appraiser or broker. You and the assessor will be given an opportunity to submit written and oral evidence upon which a decision will be based.
If you disagree with the decision of the Magistrate Division, you have the right to appeal to the Regular Division of the Oregon Tax Court. Also, if the assessor or the Oregon Department of Revenue is not satisfied either, the assessor of the Department of Revenue may appeal to the Regular Division of the Tax Court. To appeal to the Regular Division of the Tax Court one must file a formal complaint with the clerk of the Oregon Tax Court within 60 days, not two months, after the date of the mailing of the written decision of the magistrate.
In the Regular Division of the Tax Court, the appealing party, whether it be the taxpayer, the county assessor, or the Department of Revenue, is the plaintiff. The party not appealing is the defendant. The plaintiff carries the burden of proof. This means the appealing party, the plaintiff, must prove his or her proposed value is correct by a preponderance of the evidence. Preponderance of the evidence means when weighing the evidence, the scales must tip slightly toward the plaintiff as having produced more convincing evidence as to value than produced by the defendant.
A trial held in the Regular Division of the Tax Court is a formal proceeding to which the rules of evidence and civil procedure are applicable. The trial is de novo. Trial de novo means new evidence, not presented at the hearing in the Magistrate Division, may be introduced by either party at trial. You may represent yourself or you may be represented by an attorney. The county assessor will be represented either by County Counsel or a lawyer from the Attorney General’s office. If you disagree with the decision of the Regular Division of the Tax Court, you may appeal to the Oregon Supreme Court.
In some limited situations, valuation changes for residential property may be made by the Tax Court for not only the current tax year; but, also, for either of the two years immediately preceding the current tax year if it is determined by the tax court that the difference between the assessed value for the tax year and the value on the tax roll for the tax year in question is equal to or greater than 20 percent. Also, for residential property the Tax Court may order a change or correction of the two tax years immediately preceding the current tax year if you have no statutory appeal rights remaining and the Tax Court determines that good and sufficient cause exists for your failure to pursue the statutory right of appeal in a timely fashion.
For more detailed or specific information on property tax assessments and appeals, contact your county assessor’s office, the county Board of Property Tax Appeals, the Oregon Department of Revenue, or the Oregon Tax Court. You may obtain a copy of a booklet entitled "Presenting Tax Appeals to the Oregon Tax Court Magistrate Division" by contacting the Magistrate Division at (503) 986-5650. The booklet is written in layman’s terms and is very understandable.
This information is from the Oregon State Bar's Tel-law service, a collection of recorded legal information messages prepared by the lawyers of Oregon. In addition to being online, the Tel-law service is accessible by telephone at 503-620-3000 or toll-free in Oregon only, 1-800-452-4776. A touch tone phone allows direct access 24 hours a day, 7 days a week. To receive a free Tel-law brochure listing the subjects available call 503-620-0222, ext. 0.