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Mastanduno Law Group Feb. 8, 2016

How Do Property Taxes Work in Oregon? What Can I Do if They’re Too High?

Property taxes in Oregon are governed by two interdependent measures: Measure 5 and Measure 50. Through the end of the 80s and the early 90s, the economy was booming and new residents were moving to Oregon. While these two factors sound like they would be good for residents, in effect this led to a rapid rise in taxes, often forcing low income residents to move. Likewise, there were concerns that schools were not receiving equal funding because they were largely funded by local property taxes, and not funded in aggregate by the state. Measure 5 was passed by the voters in 1990 to solve these problems, and it effectively capped the tax rate on real property at 1.5% of Real Market Value (RMV). This means that for every $1000 of real market value, $5 could be collected for schools and $10 could be collected for other purposes, totaling $15 for every $1000, or 1.5%. Measure 5 also equalized school funding, making schools funded by the state and not by local municipalities and districts.

Unfortunately, Measure 5 was not a big success. Many blamed it for cuts to school funding statewide, as well as cuts to public safety programs. Nevertheless, people were still upset by rising property taxes. Measure 50 was passed to slow the rise of these taxes. Measure 50 limited what adjustments could be made, and when they could be made, to property tax assessments by introducing a Maximum Assessed Value (MAV). Traditionally, property taxes are based on the real market value of the land, which changes depending on how much the land is worth at the time. The maximum assessed value, on the other hand, is tied to the 1995 real market value of your property, minus 10%, which can only rise 3% each year. Property taxes are then assessed based on whichever, MAV or RMV, is lower. For example, if your house was worth $100,000 in 1995, then your MAV in 1995 would be $90,000, and each year after that it would go up 3%, so in 5 years your MAV would be $104,335. Meanwhile, the RMV of the property may have risen to $120,000, but you’ll be taxed on the MAV because it’s lower. This lower value becomes the assessed value (AV) which your taxes are based on.

So, why are my property taxes so high this year? Likely, the answer to that question has to do with a change to your property. Because you are taxed on whichever is lower, RMV or MAV, it is possible that last year’s RMV was lower than your MAV, or vice-versa. If this is the case, you’re likely to see some change to your taxes. However, if your taxes have changed significantly, it is more likely that an exception event has occurred. Measure 50 limits the growth of MAV to 3%, except when there has been a significant change to the property, such as new construction or additions to your house. Specifically, the counties looks for whether there has been $10,000 worth of change to your property over the last year, or $25,000 over the last 5 years. This is an exception event and triggers your county assessor to determine how much value you’ve added to your property – if such an event takes place, your MAV and RMV will be new numbers, and will likely be higher than before. If you feel your property has been wrongfully reassessed, you can challenge it with your county’s Board of Property Tax Appeals (BOPTA), or with the Oregon’s Tax Court.


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