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Saturday, March 19, 2011

New Property Valuations Are Available

Unless I missed an announcement somewhere, this is news. The town website says that your new property tax valuation was put in the mail on March 18.

Charlestown, following state law, has our homes and land re-appraised every three years. The last one reflected values at the end of 2007 and this one gives values at the end of 2010. You will be getting a statement in the mail but you can look up your new valuation online. The listing conveniently shows your new valuation compared to the previous one.

The town has also posted an explanation of the revaluation here. This includes links to more data and tables.

In line with the economy and the national housing market, my quick look at some specific properties shows that our valuations have gone down. I later found this table that confirms the decline.

I have already heard two reactions to that: “so our taxes are going down” and “so our taxes are going up”. Both of those are too simple and misleading.

It’s important to understand that the town sets a tax rate, dollars of tax per $1,000 valuation, based on the expected town expenses for the year. If everyone’s valuation goes down the same percentage then the tax rate will go up and everyone will pay the same dollars of tax. So taxes don’t go down just because your valuation goes down and your taxes don’t necessarily go up when the tax rate goes up during the year you valuation goes down.

This table shows the town tax rate over time and you can see big changes in the tax rate in revaluation years, when home and land prices were going up rapidly.

An important piece of data, which I cannot find right now, is how much the town’s total tax base (valuation) changes with this revaluation. By looking at the data that is available I would guess the total valuation has gone down about 13%. If that is right, the tax rate would increase from $7.48 per $1000 to $8.60 per $1000 to maintain the same total amount of tax revenue to the town.

In that case, if your house was valued at $300,000 before and $261,000 after the revaluation (a 13% reduction in value) your taxes would remain the same at $2,244.

So the real question is how your valuation changed compared to the overall town tax base. If your value dropped more than the overall town tax base your tax bill will fall. If your value dropped less then your tax bill will increase.

I will update this and fix any errors as I uncover more during the week.