For Property Owners

Myths about Property Assessment

Over the years, several myths have evolved concerning the role of assessors and their impact on property taxes. These myths are a result of misunderstandings of property owners as to the exact role assessors play. Historical attitudes of taxpayers toward the assessors of yore may play a part as well.

Myth One: Assessors have control over the tax rates.

Reality:

Not so! The municipal council sets both the property tax rate and the business tax rate.

Myth Two: Assessors create the market values for properties in a municipality.

Reality:

Not true! Buyers and sellers in the market create value. The assessor merely studies the market and collects information about properties to ESTIMATE VALUE.

Myth Three: Town councils inform the Assessment Agency of their financial picture before assessments are started so that the assessed values will be what is required.

Reality:

The Assessment Agency has no such information, and even if it did, it would not be able to defend values based on the financial state of the councils. Assessments for towns and cities reflect fair market value as of the base date.

Myth Four: If the assessed value on a property rises or falls due to a reassessment, then taxes will rise or fall accordingly.

Reality One

If property values rise or fall in a municipality and the council has no need to raise additional revenue, the council may adjust the mil rate to maintain tax bills at the levels prior to the changes in value. The following example may help:

  • A municipal council has decided that it needs to raise $1 Million in property tax.
  • The assessors have estimated the total assessed value of all the taxable properties in the town at $100 million.
  • The mil rate is then calculated by dividing the amount of taxes to be raised by the total assessed value and multiplying by 1000:
$1 Million (amount to be raised)
$100 Million (total taxable assessment)
X 1000 = 10 Mils
  • A home has an assessed value of $100,000. The tax bill will be:
10 X $100,000
1,000
X $1000
  • If, after a reassessment, the total assessed value of all the town's taxable properties doubles to $200 million and the amount council needs to raise remains the same at $1 million, the mil rate would be:
$1 million
$200 million
X 1,000 = 5 Mils
  • If the municipal council adjusts the mil rate down to 5 mils, the property tax on the home (which has now doubled in value) will still be $1,000:
5 X $200,000
1,000
= $1,000

Reality Two

If property values rise or fall and the council does not adjust the mil rate, taxes will rise or fall accordingly. For example:

  • The assessed value of the home in the previous example is now $200,000. If the mil rate is not adjusted and remains the same, at 10 mils, taxes will rise. The council is demanding more money.
10 X $200,000
1,000
= $2,000