Albemarle County Tax Assessor Peter Lynch presented data on the staggering year-over-year increase in county real estate property values at the January 11 Board of Supervisors meeting. “The overall change [in values] over 2022 due to the reassessment is 13.46%,” said Lynch, eliciting an audible gasp from a board member. This rate of change represents the largest jump in the tax basis in the last 15 years and comes on the heels of an 8.4% increase last year, for a two-year growth of almost 22%.
The county assesses a resident’s real estate value at 100% of its “fair market value”—the amount that assessors estimate the property (and whatever improvements are on it) could be sold for at the time of the assessment. Residents pay real estate property taxes to the county at a rate of $0.854 per $100 of assessed value. So, for example, homes in the $150,000 range increased in value about 9% in 2022, which will cost the owner about $115 more in taxes this year. The median county home value is now $436,300, and that home will cost about $380 more in taxes than it did last year.
“The important thing to remember is that the number [13.46%], while historically high, is well-supported by sales and market data,” said Lynch. “It’s an appropriate number. As the one who is responsible for establishing and defending assessments in Albemarle County, my biggest concern with the large increase this year is that it will be a surprise to most people, because the latest news about the market and the economy is not going to make people think ‘13.46%.’”
Lynch said that the news media has reported recently that the real estate market is declining as mortgage rates are going up, which causes people to wonder why assessments are increasing. “The answer to that is all about timing,” he said. “We are required to assess properties with an effective date of January 1, that’s our cutoff. All of the information we found throughout 2022 [led to] the assessments we have created for 2023.” In other words, inflation and surging demand for housing during 2022 had a strong impact on assessed values that residents will be paying taxes on this year.
County-wide, about 21,000 single-family residential property owners saw their values increase between 5 and 15%, while another 11,000 owners had values increase more than 15%. The average increase for the White Hall district was 12.3%; Scottsville was lowest at 11.3% and Rivanna highest at 15.6%. Among all types of real estate, multi-family (apartment) values shot up by 28% and mini-storage facilities by a whopping 44%. Apartment building owners often pass assessment increases along to their tenants via higher rental rates.
The Board of Supervisors could, if they wished, reduce the real estate tax rate this year by an amount that would offset the rise in values, so that property owners would not pay more than they paid last year. However, at the board’s February 22 budget work session, County Executive Jeff Richardson presented a 2023-24 budget recommendation that kept tax rates the same as last year.
A provision in Virginia state law mandates that a property assessment by a county may not result in an increase of 1% or more in the total real property tax levied (from the prior year). Based on the $3.05 billion increase in valuation of county property from last year to this year, the county will receive about $26 million more in tax revenue from citizens as a result of the rising assessments (an 11.5% increase). But, a second provision in the law says that the county may allow the tax levy to increase if the supervisors hold a public hearing—not at the same as the annual budget hearing—and deem the increase “necessary.”
The county plans a work session on the proposed budget and tax rate on March 15 and a public hearing on April 26, and county officials say the latter meeting will serve to comply with the Virginia code referenced above. Property owners can appeal their assessment to the Board of Equalization by March 30, but they must get an appeal form by contacting the county Office of the Assessor.