New Rates for Real Estate Taxes

Last November I posted about the tax reassessments which had everyone's emotions running high. After the dust had settled it turns out that overall tax assessments across Warren County increased by 93%. Of course, individual assessments will be higher or lower than that.

Warren County, and the town of Front Royal, have now approved their fiscal budgets for 2007, and the revised tax rates that go with them. The result is that the 2007 rate for real estate taxes in the county will be $0.45 per $100 (previously $0.82) and for the town, an additional $0.07 per $100 (previously $0.13).

Taking into account the 93% increase in assessments, this equates to average increases of 5.91% for the county, and 3.92% for the town. Of course, individual cases will vary depending on the specific change in their own tax assessment.

Real estate taxes remain very low in Warren County, Virginia. For example, a home worth around $250,000 (the median sale price of homes in the county so far this year) may have a typical tax assessment of say $220,000, and therefore real estate taxes this year of just $990 (or $1,144 if it is within the town of Front Royal) - that's less than $100 per month on the owner's escrow payment to his mortgage company. I always find that people relocating from out of state - and from many other parts of Virginia - are pleasantly surprised at the low taxes. That applies whether they are coming from an area of higher property values like New Jersey, or cheaper areas such as Ohio.

Tax Assessments Stir Emotions

There have been some strong emotions over the new tax assessments, which arrived in owners' mail boxes a couple of weeks ago. Warren County likes to do things differently - unlike most counties, real estate taxes are paid annually in arrears as one lump sum, and values are only reassessed every four years. Also unlike most other counties, it has previously not made much of an attempt to get close to market value, so owners have become used to seeing tax assessments way below their property's true worth.

Suddenly however, the numbers hitting people in the face really are market value - and in some cases higher (much of the work was done earlier, before the drop in prices over the summer and fall). I have had a lot of calls and emails from past clients, asking for help with 'comps' as they want to appeal their assessment. It's strange how most people think their home is worth more than it is when they want to sell, but feel the value has been over-stated when they get a tax assessment :)

But it really doesn't matter as long as everyone is being treated equally with a 'level playing field'. It seems that assessments have increased on average around 90%, but that doesn't mean that real estate taxes will go up 90%. Instead, the county will be fixing its 2007 tax rate in May next year, and will adjust the rate down (currently $0.82 per $100, or 0.82%) to compensate for the increased assessments, subject of course to the annual increase that they are looking for (in 2006 the rate increased from $0.79 to $0.82).

A 'public memo' was released November 15 by Doug Stanley, Warren County Administrator, explaining all this - click here to view it. Good job Doug! But it's a pity that this couldn't have been released before the assessments were published, so that people were forewarned, and had time to get their minds around what to expect. I suspect that may have reduced the number of people appealing their assessments over the past couple of weeks.