Property Assessment

Keeping Current with Changes in Legislation Affecting Real Property Assessments in Virginia

A Resource Guide for Virginia Property Assessors

The majority of the legislation passed by the Virginia General Assembly during its 2010 becomes effective July 1, 2010.  Modern property assessment practices require that assessors keep up to date with current legislative proposals, laws, and court decisions. The following are suggested resources to help you keep up to date on these changes. Several statewide resources will provide a review of legislative changes that will need to be considered for upcoming assessments.  Suggestions are also made so that you can add local city and county resources to customize your list.

Legislation

Pending legislation (January – March each year with most laws effective July 1 of year)

Virginia General Assembly, Legislative Services
http://leg1.state.va.us/

Adopted Legislation (2010 Legislative Session)

Virginia Municipal League, legislative Activities, VML Legislative Report (summary of General Assembly activities for current year, available each May) http://www.vml.org/Legact.html

Virginia Association of Counties VACo’s 2010 Legislative Summary (summary of General Assembly activities for current year, available each May) http://www.vaco.org/LegPublications.html

Historical Records of Adopted Legislation

Virginia Tax Policy Library, Legislative Summaries (from 1973 to within one year of current)
http://www.policylibrary.tax.virginia.gov/OTP/Policy.nsf

Reports Related to Legislative Process

Reports to the General Assembly (published, pending, overdue 1897 to present)
http://leg2.state.va.us/dls/h&sdocs.nsf/Published+by+Year?OpenForm

Laws

Constitution of Virginia
http://legis.state.va.us/laws/search/constitution.htm

Code of Virginia
http://leg1.state.va.us/000/src.htm

Virginia Attorney General Opinions (1963 to present)
http://www.policylibrary.tax.virginia.gov/OTP/Policy.nsf

Virginia Administrative Code (Regulations)
http://www.policylibrary.tax.virginia.gov/OTP/Policy.nsf

Rulings of the Tax Commissioner (1981 to present)
http://www.policylibrary.tax.virginia.gov/OTP/Policy.nsf

Virginia Department of Taxation Tax Bulletins (1979 to current)
http://www.policylibrary.tax.virginia.gov/OTP/Policy.nsf

You’ll also want to add your city or county charter and code of ordinances to this list.

Court Decisions

Supreme Court of Virginia
http://www.courts.state.va.us/
  Opinions Search http://www.courts.state.va.us/search/textopinions.html 

Virginia Court of Appeals
http://www.courts.state.va.us/courts/cav/about.html
  Opinions Search http://www.courts.state.va.us/search/textopinions.html

You’ll also want to add your city or county circuit court to this list.

Other Sources

Virginia Tax Policy Library http://leg1.state.va.us/ 

Virginia Legislative Information System http://leg6.state.va.us/lis.htm
  Subject Index – Real Estate and Real Estate Taxes (1995 to present)
  http://leg6.state.va.us/cgi-bin/legp604.exe?000+sbj+091

You’ll also want to add your city or county attorney to this list

Common Sense Disclaimer: The author takes no responsibility for the absolute completeness of this list nor endorses any of the above links as being the sole source for such information.

Starting a Business: What You Need to Know About Property Assessments & Taxes

Knowing the Basics of How Property Assessments Work Can Save You Money

When starting a new business you have so many things to do that it's easy to overlook some important items.  Real and personal property taxes are a real cost of doing business and it's critical that you know the basics when starting a business so that you limit unforeseen expenses that could mean the difference between death and survival for your new business.

If you do just one thing related to property taxes call your local assessor and ask what property taxes you will be responsible for related to your business.  He or she may ask you to describe the type of business you are starting and want to know if you will be buying real estate and personal property for use in your business or leasing business space and equipment from others.  The bottom line is you'll want to have as clear a picture as possible about your costs of starting and maintaining your business.

When I started my first contract painting service in the mid-1970s I had access to Small Business Administration publications, which were great, but don't compare to the amount of information available to business start-ups today.  But then again, too much information can overwhelm and cause procrastination to set in.  I hope what I've provided here is useful information in a brief format that doesn't just add to the pile of information but really helps you.

Click here for a full-text article that explains the basic things that an informed business owner should know about real estate assessments and taxes in their community.  It also provides you with questions to ask your local assessor that could help you save tax money in the long term.

This full-text publication will be available for a limited time.  After the first 10 days of posting the full-text article will only be available to Property Assessment blog subscribers.  For additional advice on property assessment issues subscribe to our Property Assessment e-Alerts.  An e-mail will be sent about once a month that alerts you to new postings on our blog.  You can also follow us on twitter at @asktheassessor.

Use Caution Before Changing Property Tax Laws

Change to Reflect Value Declines May Not Be Best Long Term Solution

The Problem
Many property owners are outraged by the fact that their property assessments are not declining as fast as market values, or in some instances even increasing.  Throughout the country news stories are reporting on the concerns and outright disbelief expressed by property owners that assessments are not adequately reflecting real estate market realities.  There has been such an outcry that many have asked state legislatures to do something, including requiring more frequent reassessments.  But this might be one of those situations that calls for being careful what you ask for because you might just get it, and then live to regret it dilemmas.

Why Property Assessments Lag the Real Estate Market
While there are many reasons that property assessment lag the actions of buyers and sellers in the real estate market, here are some key reasons:

• State tax laws prescribe how often properties are reassessed (annually, or everywhere from every two to ten years) and the effective date for the reassessment (the date of the estimated value).
• Generally accepted assessment practices require that mass-appraisal methods be used to value large quantities of properties during each reassessment. These mass-appraisal methods use computer models that allow a relatively small staff of assessors to value thousands of properties that consider comparable sales during a 12 to 18 month period (or perhaps longer) before the effective date for the reassessment.
• Local assessors need time for other administrative functions as well as completing reassessments. Although the computerization of the assessment process over that last 30 years has enable assessors to value properties more frequently, reassessments are not the only duties of local assessors. Assessment offices also manage large real estate databases which require records maintenance that include property ownership changes and physical changes in properties (new construction, zoning changes, subdivisions, etc.).
• During a typical reassessment cycle (pre-2007 or 2008) considering market activities 12 to 18 months before the effective date of the reassessment actually helped to keep assessments conservative. Because the valuation of real estate is not an exact science (either by independent single-property appraisers or mass-appraising assessors), having an extensive study period helped to keep values conservative and helped document support for value increases.

Possible Actions
Among the possible actions under consideration by property owners is to increase the occurrence of reassessments.  But this action could be shortsighted if their goal is to have lower assessments that result in lower real estate taxes.

What property owners, tax advocates, and tax policy groups need to remember is that the reasons that assessments are lagging behind a falling market are the very same reasons that assessments lagged behind a raising market.  Up until mid to late 2007 many real estate professionals were telling buyers and sellers that real estate assessments were typically 90 to 95 percent of the current market value of their properties.  That was because assessments were lagging behind the raising market.

I'm very much a proponent for annual assessments for the very reason that property owners understand value changes best if they are only lagging the market by 12 to 18 months, as opposed to several years.   But I do not advocate annual assessments as a means to achieve lower assessments and the possibility of lower taxes.  When normal real estate markets return (hopefully sooner than later) assessments will rise more frequently, if state tax laws are changes to more frequent assessments.

Also keep in mind that real estate taxes are comprised of two elements, assessed value and the real estate tax rates.  In a community that depends on property tax revenues for services (fire/police protection and public schools, etc.), if property assessments are lowered real estate tax rates can increase resulting in higher taxes.  This is very scenario is now playing out in communities across the nation.

For more information about property assessments and taxes read our Property Assessment blog.

A Global Perspective on Real Estate Markets

Real Estate: Local Influences with Global Consequences
Richard L. Sanderson

On March 18 I had the great pleasure of attending a day long training session presented by the International Association of Assessing Officers (IAAO) and the Royal Institute of Chartered Surveyors (RICS) Americas.  The training session was entitled "Rising Above a Falling Market: 2010 Commercial Real Estate Market Symposium" and held at the John Hopkins University Paul H. Nitze School of Advanced International Studies in Washington, D.C.

I've attended many educational courses offered by the IAAO over the last 36 years, but this was my first exposure to a joint partnership between the IAAO and RICS Americas.  If yesterday's presentation is an example of what these two professional organizations can produce, I look forward to attending any of their efforts in the future and heartily encourage you to do the same.  The 16 presenters during the nine hour symposium were all highly qualified professionals that delivered insights into the commercial real estate market.  Featured speakers included Peter Korpacz, K. C. Conway, Andrew D. Dorchester, and Reginald R. Goeke.

The general concept that I walked way with is that both the residential and commercial real estate markets are indisputably global markets.  Although real estate has its location and influences grounded in the local market, as professional property assessors, real estate appraisers, or valuation specialists we must recognize that financially real estate is part of the global market.  The realities of the global economy since at least September 2008 have made this quite evident.

The top three most important things I walked away from the symposium with that I believe I can use in my work immediately are:

1. Valuation specialists can effectively mine older sales and capitalization rate data by bringing it up to date through a local survey of buyers and sellers for use in determining current values, and in defense of those values.
2. There are efficient ways of monitoring commercial and residential real estate markets and other leading indicators in order to forecast likely changes in assessed values during the next three to five years.
3. Changes in financial accounting standards that are being implemented in several countries and are scheduled to take effect in the U.S. in 2015, as part of international financial accounting standards and generally accepted accounting standards, will affect the way we collect data and value income-producing properties and personal property.

 

Sample Property Assessment Change Tracking Report Available

Pursuing Mission of Assisting Property Assessors

As part of an ongoing mission objective to help professional property assessors, Local Government Services International Senior Consultant Richard Sanderson has made available a sample property assessment change tracking report.  For use primarily by property assessment offices (including local, regional, and state and provincial agencies) for tracking property assessment changes that result from the assessment review and appeal process, the report can also be adapted for other uses.  For example, the assessment change tracking report can assist the assessment office in keeping citizens informed of the status of their challenged assessments or be adapted for inclusion in an assessment office operations or procedures manual.

Best assessment practices require that assessment offices maintain an audit trail of changes in assessment records that affect assessed values (Assessment Practices: Self-Evaluation Guide by the International Association of Assessing Officers).

Because larger assessment jurisdictions, or those with more up-to-date computer-assisted mass appraisal (CAMA) systems, may have a built-in feature that tracks these changes the availability of a sample assessment change tracking report is especially helpful to smaller assessment offices.

To access the Adobe Acrobat PDF click here.

A Microsoft Excel version is available by subscribing to our free Property Assessment E-Alerts at http://yourpropertytax.typepad.com/my_weblog/signup-here.html