Thursday, April 3, 2008 | 2 a.m.
- Tax-resistant history leaves Nevada with fewer choices (11-4-2007)
- Three property tax plans under review (3-16-2005)
- Lawmakers split over contentious property tax issue (12-4-2004)
Amid woes over a downturn in the housing market, one might think there would be at least one bright spot for those who have watched their home values fall in recent months — smaller property tax bills.
But that won’t be the case for most Clark County homeowners.
Because of the complex way property taxes are calculated, most will actually see increases in their tax bills, which will start arriving in the mail in July. In many cases, owners of homes whose values have dropped will see tax increases as large as last year’s.
Amid skyrocketing home values, state lawmakers in 2005 passed a law capping annual property tax increases at 3 percent. Although home values are dropping throughout the valley, the decreases are not nearly as big as the increases that preceded them.
In short, to see an actual decrease in your property tax bill, your home’s value would have to not only drop, but drop considerably.
And that hasn’t happened for most homeowners.
The county has roughly 716,000 residential, commercial and industrial properties. Of those, the values of about 396,000 declined during the most recent assessment, though there likely will be more once the results of owners’ appeals are tallied, Clark County Assessor Mark Schofield said.
The vast majority of those decreases — 303,204 — involved drops of less than 10 percent, he said. That’s not enough to warrant a smaller tax bill in a city where most home values jumped by many times that amount in recent years.
Schofield said he could not estimate the average assessed value of a home this year compared with 2004, the base year for the 3 percent cap.
But a look at changes in median resale values for traditional single-family homes is instructive.
In mid-2003, when assessments were being made for 2004 tax bills, the median resale price of traditional homes was just more than $163,000, said Dennis Smith, president of Home Builders Research Inc. Median resale prices peaked in mid-2006 at about $290,000, then dropped to about $250,000 by the end of 2007, Smith said.
Assuming the assessed value of a home follows that downward pattern, its owner would not see a property tax decrease this year unless the home’s value plummeted to about $178,000.
The concept of property taxes going up while home values drop is a tough one for many homeowners to grasp.
Assistant Treasurer Rebecca Coates said her office has been getting many calls from people wanting to know when to expect their property tax refunds. She has to tell them they aren’t coming.
“It’s a hard concept to get your head around,” she said.
Schofield said people everywhere keep asking him similar questions.
“I get questions at Home Depot, the grocery store, Walgreens,” he said. “That’s the No. 1 question on people’s minds.”
Not receiving a property tax reduction as your home’s value falls might be reason to gnash your teeth and pull your hair — if not for the fact that the same homeowners likely enjoyed significant tax breaks in earlier years.
Let’s say a homeowner paid $1,000 in property taxes one year. Thanks to the 3 percent cap, he would pay only $1,030 the next year — even if the home’s value rose 50 percent.
So during the Vegas housing boom, as homeowners were clicking champagne glasses while watching home values go through the roof, they weren’t paying proportional increases in property taxes.
“Unless the assessed value of the property drops by a percentage greater than last year’s abated taxes, then you’re not going to see a reduction,” said Mark Vincent, the city of Las Vegas’ finance director.
That might sound like gobbledygook, but Vincent puts it in more understandable lay terms.
“You can’t get a rebate on something you never paid,” he said. “If you never paid the tax abatement, how can you get a reduction on it?”