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.
Every year a government assessor decides how much our homes are worth for the purpose of taxing our real estate. This method of supplying local government with money is immoral because the assessment presumes real money in our pockets, which isn’t valid.
Yes, you can borrow against the home’s assessed value, but such an action puts you into debt. If the assessed value of your house was truly money in your pocket, as deemed to be the case with this manner of taxation, you wouldn’t need to borrow or get into debt.
Obviously then, our homes don’t represent cold hard cash for us to spend as if it’s money in the bank accruing interest. This being the case, people can be easily taxed out of the homes they’ve lived in for decades, if not their whole lives, just because richer folks can afford to pay exorbitant prices for properties in the neighborhood.
Government may love such “gentrification”, but for the legacy homeowner who’s faultless in this process that makes his home so valuable he can no longer reside there, it’s cruel punishment. And, especially for those on a fixed income, ever-increasing property taxes are an unbearable burden.
Real estate taxes should be based upon what the homeowner spent to purchase the property rather than what someone else pays for nearby property. If someone thinks a property is worth a high price, he can pay higher taxes. And if someone decides to sell, he can pay a percentage of his capital gains to the locality because he then possesses real cash.
We had a revolution because of taxation without representation. Now we need a revolution because of taxation without commiseration.
Marlene A. Condon
Thank you, Crozet Gazette, for providing your readership with this valuable information regarding 2023 real estate assessments and their impact on property taxes.
I spoke at the March 15, 2023 Board of County Supervisors meeting to suggest creation of what I call a baseline budget that adheres to the tax relief and affordable housing mandate of Virginia Tax Code. This budget will serve as the baseline against which to compare the budget the County has proposed.
Virginia tax code limits year-over-year increases in total real property taxes collected by the County to no more than one percent. Specifically, Subsection A of Virginia Tax Code 58.1-3321 states the County “shall reduce its rate of levy for the forthcoming tax year so as to cause such rate of levy to produce no more than 101 percent of the previous year’s real property tax levies.”
The Board of Supervisors has scheduled a special public hearing for April 26 to set a rate of levy that exceeds the mandated limit on real estate tax increases.
I requested, at this public hearing (as well as upcoming town hall meetings), the County highlight those proposed expenditures funded by levies garnered in excess of the one percent limit. After public discussion and comment, remove or decrease those budget items no longer “deemed to be necessary,” as required under Subsection B. With these savings, reduce the rate of levy below $0.854 per $100 of assessed value accordingly.
Unlike graduated income taxes, real estate taxes are a regressive, flat tax. The looming large increase in tax bills hit hardest on low-income property owners, and indirectly, upon all renters as well.
This enhanced budget review process will help citizens of Albemarle County reach consensus and increase trust that all budget expenditures funded by real estate taxes collected in excess of the one percent mandate are truly necessary, as required by Virginia Tax Code.
Make your voices heard!
J. Dirk Nies, Property Owner
Thank you, Lisa Martin, for your excellent reporting on this important topic.
While you provide average data, averages do not tell the whole story. My situation as a low-income, elderly person living on my savings and modest retirement income is a case in point.
My real estate tax bill will increase by 29.6% in 2023 as compared to 2022, and by $38.2% when compared to 2021.
Like many lower income, elderly property owners in Albemarle County, my husband and I do not qualify for real estate tax relief because our net worth is deemed to be too high.
I spoke at the March 15 BOS meeting and I urged the Supervisors to expand eligibility for elderly property owners in dire need of real estate tax relief. My remedy, which I offered for consideration, was this. Simplify eligibility and compliance by eliminating the current restrictions on Total Net Worth.
Under Virginia law, eligibility for tax relief can be established either upon net financial worth OR upon annual income. It need not be both. Elimination of Total Net Worth would simplify participation in this program. Most applicants prepare federal and state income tax returns so Combined Total Income can be readily provided to the County. In contrast, pulling together information about Total Net Worth is an extra burden, and for some assets, valuation can be difficult to do accurately.
As an added benefit, elimination of the Total Net Worth eligibility requirement would reduce the workload on County staff responsible for administration of this program.
To prevent overly generous tax benefits going to low income but high asset elderly landowners, establish a cap on the maximum annual tax relief that any applicant can receive. I suggested setting the cap at $6,000.
If readers of the Crozet Gazette agree with this approach, please speak up. Elderly residents of Albemarle County who wish to age in place, in their affordable home and upon the land they love, need your help!
Carmen Alicia Morales Perez-Nies