A Taxing Issue by Lee McKnight

'Tis the season of too much Halloween candy and Property Tax bills.  I can’t help you with the candy part but will try to address some of the frequently asked questions related to the recent tax bills.

Oregon has a somewhat complicated process for determining taxes on real property.  This is mostly due to a combination of tax limitation measures voters have passed and subsequent legislative actions that clarify or adjust the tax code to account for what we’ve voted in.  Although the Counties collect taxes, tax policy is set by the State.

The most common misconception is that taxes themselves can only go up 3% a year.  This is not the case.  Your home’s Assessed Value, which is used to set the taxable amount, can only go up 3% a year but when we vote for bonds to build schools, fix infrastructure or buy land, those costs are incorporated into our tax rate before it is multiplied by the assessment.  This year, that additional amount was larger than normal and has caused a lot of confusion.

Bottom line, we are taxed on the lower of these 2 values:

  1. Assessed Value (which was set in 1997 at the tax value of your property in 1995 minus 10%) times your tax rate*. The assessed value is only allowed to rise 3% per year unless the property changes (eg: remodeling and/or additions). 

  2. Your Real Market Value multiplied by the Measure 5 limits of $5 per $1000 for Education taxes and $10 per $1000 for General Government taxes.  This amount is then added to the amount for items that are excluded from the Measure 5 limits, such as bonds.

*You can find your tax rate by looking at your tax bill and finding your levy area code at the top and looking at this nerdy tax spreadsheet to find your total tax percentage.  

For many of us, the Assessed value calculation is lower than the 1½% of Real Market Value calculation because the assessed value of our property is much less than the Real Market Value. But where Real Market Value and Assessed Values are close in amount, it is possible that this will cause the second formula to be enacted.

If you believe that your Real Market Value is too high and that there may be a case for appealing, you can appeal yourself or engage a tax appeal company. There are companies that will review your tax bill at no cost to see if there may be a case of over taxation. Keep in mind that in the appeal process you would have to show that the actual market value as of January 1, 2017 was low enough so that 1½% of that would be less than what you are paying for education and general government services. Call me for details.

For more information on taxes check out the following websites:

FAQ for taxes in Multnomah County

FAQ for taxes in Clackamas County

FAQ for taxes in Washington County

There's an App for That by Lee McKnight

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Do you know that only 41% of homeowners have actually documented or evaluated their belongings?! In today's tech-driven world we would like to share a few apps that can help with the documentation of your belongings: 

Encircle: a free app for iOS + Android that allows you to take and upload photos of your belongings and add information, such as serial numbers, price, etc.

DreamVault: a free app for iOS + Android from American Family Insurance that allows you to upload photos and add descriptions of each item.

Sortly: a free app for iOS that allows you to take a photo of your items and sort them within your inventory, but also for keeping track of items when you move.

Exploring the Overlook Neighborhood by Lee McKnight

Overlook has a rich history beginning with the formation of the bluffs it sits upon from debris washed down the Columbia River during the Missoula Floods. During the 1800s–before Overlook was a neighborhood–the area was part of the city of Albina, which incorporated with Portland and East Portland in the 1890s.

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Pay it Forward: Schoolyard Farms by Lee McKnight

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Many of our favorite nonprofits are wild optimists and committed pragmatists; Schoolyard Farms is no exception. They noticed underutilized schoolyard acreage and saw a golden opportunity to use that land to create both an educational program and a community service. 

Schoolyard Farms is the only organization in Oregon helping schools scale their gardens up into farms with high enough production that they can sell produce to the community, bring in a revenue stream, and thus support urban farm jobs. All of the above–locally grown produce, jobs, and a robust outdoor classroom for students–are huge benefits for the school and the surrounding community!

Our client's daughter Ava wrote about her experience: Schoolyard Farms is a non-profit that focuses on teaching kids healthy habits. Schoolyard Farms has about a half acre of land at our elementary school where they grow more than 20 different veggies and fruits. During the school year, the students attending the elementary school get to enjoy fresh fruits and veggies. Schoolyard Farms also hosts a summer camp where the campers get to harvest and eat lots of the veggies.

Home Energy Score by Lee McKnight

I don't like change any more than the next person, but when something comes along that helps my clients make good decisions I am all for it. That is why I am excited about Portland's new "Home Energy Score" Program. Under the new program, sellers will be required to provide the energy efficiency equivalent of a "miles per gallon" rating of their house when putting it up for sale. There has been quite an uproar from the Realtor community; some are even calling the new requirement a "tax on selling your home".

Bottom line, it will cost sellers $150-300, it will help consumers analyze the true cost of living in a home like never before, and it will show buyers what changes they can make to lower their energy usage. Here are the basic facts.

What

The Home Energy Score ordinance (in effect January 1, 2018) requires all sellers of single-family and townhome properties within the city limits of Portland to obtain a home energy report. They must disclose the report to any real-estate agent working on their behalf and any prospective home buyers visiting their home while it’s listed for sale. Home Energy Scores will be publicly disclosed and available here and required in all listings of the property including third party listing services like RMLS, Zillow, Trulia, and Redfin.

The City passed this ordinance to support our ultimate goal of reducing carbon emissions and meeting the goals outlined in Portland’s Climate Action Plan. The program is designed to make energy performance in residential buildings transparent so that sellers and potential buyers can better understand the full costs of operating a home. There is also hope that bringing awareness to this information will motivate energy efficiency investments in homes ultimately lowering utility bills and increasing health, comfort, and safety for homeowners.

How

Sellers will pay an authorized Home Energy Assessor to perform an Assessment of their property in advance of listing the property for public sale. Depending on the scale of the property, an Assessment can take anywhere from 45 minutes to 2 hours and cost between $150 and $300. During an Assessment, inspectors will look at the home’s mechanical systems, insulation, and air sealing, not past utility bills. Home Energy Scores are measures of a home’s performance not of current energy usage in the home. In this way, the score is similar to the miles per gallon rating on cars.

To support homeowners through this process the City is developing a plan to assist or cover the cost of these reports for low income-qualified sellers and will provide a searchable database of authorized Home Energy Assessors. 

Further Resources

  • City of Portland Home Energy Score FAQs
  • Sample Home Energy Report