Oregon Property Tax Basics:
- Property taxes in Oregon are due November 15th for the tax year beginning July 1st and ending June 30th. Tax bills are mailed no later than October 25th.
- Property taxes are based on the property’s Assessed Value (AV) multiplied by the applicable millage rate.
- Millage rates vary by taxing district and are limited by Measure 5, passed in 1990, to 1.5% of Real Market Value (RMV). Exceptions for exempt bonds and local options may raise the rate above 1.5%.
- Assessed Value is the lesser of:
- the Real Market Value (RMV), which is the market value on the January 1st preceding the July to June tax year, or
- the Maximum Assessed Value (MAV) determined under Measure 50, passed in 1997. Measure 50 amended the Oregon constitution to set the 1996-97 MAV at the 1995-96 assessed value less 10%, increasing by three percent (no more, no less) per year thereafter, with a few exceptions.
- Measure 5 Compression: Sometimes, typically when MAV is about 70% of RMV, the Measure 5 limitation of 1.5% of Real Market Value reduces a property’s tax bill below the Measure 50 limit. In this case the county’s opinion of the market value determines your property tax. If you disagree, you have until December 31st to appeal.
The 2019-20 millage rate in Multnomah County averages about 0.0253, or 2.53%, because of voter-approved bond measures. Assessed Value times 2.53% equals your property tax (roughly) unless limited by Measure 5 compression.
In Multnomah County the Maximum Assessed Values average 49% of Real Market Values in the 2019-2020 property tax year. Therefore, Assessed Values also average 49% of Real Market Values.
One of several arguments made in support of Measure 50 was that a three percent growth rate provided stability and predictability to the property tax system.
Unlike most states, the Maximum Assessed Value does not reset when a property is sold.
How Has Measure 50 Affected the “Fairness” of Property Taxes in Portland?
Portland Real Market Values (RMV) have risen differently around Portland. Close-in east side neighborhoods have appreciated far more since 1995 than outer east side and close in west side Portland neighborhoods.
North Portland 401%
NE Portland 310%
SE Portland 282%
Outer East Portland 166%
West Portland 191%
The Maximum Assessed Values (MAV) in Multnomah County for the 2019-20 property tax year, meanwhile, have risen about 67% since the 1995-96 tax year.
The 2019-20 millage rate in Multnomah County averages about 0.0253, or 2.53%. The millage rate is applied to the lesser of the RMV or the MAV to arrive at the property tax.
Consequently, the property taxes on a $450,000 home, based on Maximum Assessed Value instead of Real Market Value, average:
Home Value Est MAV Est Tax
North Portland 450,000 150,361 $3,804
NE Portland 450,000 183,820 $4,651
SE Portland 450,000 197,209 $4,989
Outer East Portland 450,000 283,492 $7,172
West Portland 450,000 258,477 $6,539
Compression will probably not change the example as $450,000 times 1.5% (the Measure 5 limit) is $6,750, and approved bonds would bring even the highest average within the limits. So a $450,000 home in outer east Portland pays 89% more in property tax than a $450,000 in North Portland. Obviously this is not fair, at least based on the principle that similarly valued homes should pay the same property taxes.
What should you do?
If you can’t change the property tax system, at least you can consider the impact of property taxes on your next property purchase. Property tax expense is a huge component of the total cost of owning a rental property, for instance, and it often is not considered in the pricing of smaller rental properties.
What happens to my property taxes when I remodel?
- Since new construction and remodeling improvements don’t have an assessed value from 1995, an adjustment to Maximum Assessed Value is made to apply the Measure 50 limits to new improvements such as:
- New construction
- Partitioned and subdivided lots
- Substantially remodeled property – $10,000 in one year or $25,000 over five years
- Zoning change
- Change in exemption status
- The assessor computes a ratio that the average MAV bears to the average RMV of unchanged property in the same class and area, called the Changed Property Ratio.
- The ratio is applied to the market value of improvements on January 1st, creating a maximum assessed value for improvements.
- In most of Multnomah County the Changed Property Ratio for 2019-20 is 49.0%, meaning that roughly half of the value (not cost) of a remodel will be added to your maximum assessed value. The increased MAV times your millage rate should be your property tax increase.
- If you disagree with the county’s valuation of new construction, remodeling, or other exceptions, you have until December 31st to file an appeal. You cannot appeal after that.