What is the revaluation process all about?
All communities in New Hampshire share in a five-year assessment revaluation cycle, which is mandated by the State constitution. These town revaluations will receive periodic Assessment Reviews from the Department of Revenue Administration, which in turn, follows guidelines set by the Assessing Standards Board. As you can see, property taxation is a process that involves all levels of government.
No system of taxation is perfect, in New Hampshire we rely on our property taxes to fund the majority of the operating budget and special warrant articles placed on the ballot for the March vote.
All property owners are responsible for paying their proportional share of this tax, which then pays for the vital services necessary to run both the Town, the School, and the County. Some examples of these essential expenses would be Fire, Rescue, Police, and Highway.
Market value is a factor that is used to determine your assessed value, and your assessed value is used to determine your proportional share of these expenses. The confusion arises because assessed value does not change as often as market value.
Selling prices of homes are constantly fluctuating, hence the term market driven price. The only way to keep your assessed value at today’s market value or market price would be to have a revaluation or statistical update done on a yearly basis. A revaluation is costly. In New Boston we place money into a Capital Reserve Fund each year, in anticipation of the revaluation process every fifth year. The current cycle is expected to cost in the $150,000 range.
Your property is presently assessed according to the values from our last statistical update, done in 2006. Property values in Southern New Hampshire at that time were high. In today’s market, property values are lower. This difference between assessed value and market value does not affect your taxes. A proportional decrease in property values affects all property owners on a town-wide basis. When the value of all property town-wide falls, it will increase the tax rate, but not necessarily the total amount of taxes that any single property owner pays.
Property tax is your proportion or fair share of the expenses to run your society (Town, School and County). The tax rate is set based on what was approved by your vote for Town and School spending on the March Warrant, lees any revenues from other sources and then divided by our taxable assessed property values.
The tax amount is a set figure; we must raise that sum of money to run the Town. Presently, your assessed values are higher than the current market prices, but the tax rate is low. If the assessed values decline (like the market) during this revaluation cycle, the tax rate will have to increase. We can have higher than market values and a lower tax rate or market values (or lower than market values) and a higher tax rate.
Periodic revaluations do a good job of adjusting for these natural market driven changes in property values. The concern should not be that the values assigned to your property reflect what you could sell that property for today, rather that the value of your property be proportional to all other property in the Town. The result of this proportionality is that we all pay our fair share or portion of the taxes.
This is why it is so important that the assessor identify whether a decrease in the value of a particular piece of property is specific to that property or proportional to other property town-wide. A specific decrease in property value is reason for abatement and a decrease in property taxes, for that property only. The concern is not that the values assigned to your property reflect what you could sell that property for today, rather that the value of your property be proportional to all the other property in the town. We all want to pay our fair share, but no more that that!
This revaluation cycle will begin in 2009. Jack McCarthy, our contracted assessor for the revaluation, will be out to all properties by the end of 2010 to verify all physical data. Property values may or may not have recovered by then, and your “new” assessed value will reflect that. In either case, it WILL NOT reduce your taxes. Once the budgets are set and the vote is in, we have a finite amount of money to raise. If the assessed values drop, the tax rate will have to go up and if the assessed values go up, the tax rate will go down.