Oregon Property Taxes
How are Oregon property taxes calculated? It's a frequently asked question, especially by those relocating here, and, I'll confess, it's not something that can be explained quickly. Even real estate brokers have expressed a lack of a full understanding! Whether you're interested in areas around Portland, such as Washington County, Multnomah County, or Clackamas County, this post will explain the tax changes created by voters, how the tax system works, and where you can get more information about Oregon property taxes.
Before 1990, Oregon property taxes were calculated as a percentage of the market value of the property, which is the way property taxes are calculated in much of the country. Then, in 1990, Oregon voters passed Measure 5, which established a 1.5% rate cap for taxing the market value of a property.
By 1996, after home values and taxes had risen further, Measure 47 (1996) and Measure 50 (1997) were passed by Oregon voters. See a quick video on the tax measures here. These measures created a new Maximum Assessed Value (MAV) for calculating property taxes. The initial MAV was equal to 90% of a property's 1994-95 or 1995-96 tax year assessed value, whichever was lower. All subsequent increases in the MAV were limited to 3% per year max. Some folks think Oregon property taxes can't rise more than 3% annually, but it's actually the MAV that's capped at 3%.
When a home is sold, the selling price is considered it's current market value. This type of valuation is called the Real Market Value (RMV) in Oregon. In many states, after a sale, the new RVM is used to calculate the assessed value for property taxes. Not so with Oregon property taxes! Every year, both the MAV and RMV for all properties are calculated and updated, and the lower of the two is used for the taxable assessed value. A property's MAV can be much lower than the RMV, depending on the age and location of a home. Clearly, that was the intent of the voter's measures; the rate of property tax increases would be controlled, rising more slowly than property values.
Taxing districts are geographic areas that determine property taxes. These districts charge a millage, or mill rate, per $1,000 of assessed value. The 1.5% max cap applies here: 0.5% for schools, and 1.0% to the general fund. Mill rates vary from community to community, with the City of Portland in Multnomah County having some of the highest mill rates, while Washington County's are significantly lower. Why so different? Because cities and counties have individual budget needs, and tax districts have local taxing authority (with voter approval) for temporary increases within certain limits. Also, they can ask voters to approve bonds for capital projects, such as new schools, parks, and roads, which are not subject Measure 5 restrictions. You can find more info about this here: Oregon property taxes
Remember, additions or renovations to a property can increase the tax bill. Work with a value of $10,000 or more in one year, or $25,000 in five consecutive years, can trigger a new assessment and an increase in assessed value.
Taxes are levied annually on July 1st, with statements mailed by October 25th and due by November 25th. Payments can be spread into thirds, with the final due May 15 the following year. Discounts apply when either all or 2/3 of the tax bill is paid by 11/25.
In the 90's, voters changed how Oregon property taxes are calculated and collected. Some feel this system has created unfair imbalances, but, with today's strong anti-tax sentiment, it appears unlikely the current system will be changed again anytime soon.
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