2008 Assessments? Why are my taxes going up if my property value is going down?

Market Values Down, Taxable Values Up: Over the next month, assessed values for 2008 will be sent to property owners by area assessors. With much attention being given to the struggling housing sector, many property owners will find that their assessments will go down. As they do, though, their taxable values may still rise up to the rate of inflation, which is 2.3%.

The following graph shows the increase on a sample property’s growth in assessed and taxable value from 2005 to 2008. The graph illustrates the effect of Proposal A on assessed and taxable values:

The taxable value can continue to rise even when the property assessment is going down. If you look at the change from 2007 to 2008, you’ll notice that the assessed value went from 93,400 to 91,600. This is a decrease of -1.93%. The taxable value rose in the same period from 76,929 to 78,698 by the inflation rate of 2.3%.

Proposal A created the mathematical equation that controls the Taxable Value of a property. By definition, Taxable Value (TXV) is the lesser or the State Equalized Value (SEV) or the Capped Value. Capped Value is last year’s Taxable Value times the CPI (2.3%) or 5%, whichever is less.

Year	Assessed Value	Taxable Value	% SEV Growth	% TXV Growth
2005	83,200	71,816
2006	88,800	74,185	6.73%	1.033
2007	93,400	76,929	5.18%	1.037
2008	91,600	78,698	-1.93%	1.023

2007 TXV times CPI (2.3% or 1.023) = 2008 TXV

So the above example works out as : 76,929 X 1.023 = 78,698

If a property has added new construction or has removed buildings, then those factors are also considered in the Taxable Value equation. Also, when a property transfers, the Taxable Value (TXV) is set the State Equalized Value (SEV) in the following year.