Bolling: Local Real Estate Assessments and How They Impact Your Taxes

As discussed in an earlier post, every year, right before Christmas, we get our Personal Property tax bill from the county. It reminds us not to spend all of our hard earned money at Christmas, because shortly thereafter our local government will be looking for its share of our hard earned money.

And every year, right after Christmas (at least in Hanover County), we get our Notice of Real Estate Assessment. It informs us how much the assesed value of our real estate (our homes) has gone up over the prior year.

(NOTE: Not all localities in Virginia adjust real estate assessments every year. Some do this every other year, or even less frequently.)

For example, this year, my real estate tax assessment increased by 6.27 percent. That’s after it increased by a combined 17.32 percent over the prior two years. That’s a whopping increase of 23.59 percent in the past three years!

On the one hand, that’s good. It suggests that the value of my home is increasing. On the other hand, that’s bad, because my local real estate taxes are based on the assessed value of my home, and so are yours.

Here’s what we often fail to miss, and it is my annual reminder regarding who is actually responsible for increasing your local real estate taxes.

IN VIRGINIA, AN INCREASE IN YOUR REAL ESTATE ASSESSMENT CANNOT, BY LAW, RESULT IN AN INCREASE IN YOUR REAL ESTATE TAXES!

IN VIRGINIA, YOUR REAL ESTATE TAXES WILL ONLY INCREASE IF YOUR LOCAL BOARD OF SUPERVISORS VOTES TO INCREASE THEM!

IF YOUR REAL ESTATE TAXES GO UP, DON’T BLAME THE ASSESSOR. BLAME YOUR LOCAL BOARD OF SUPERVISORS!

Here’s why.

In Virginia, if a local real estate reassessment results in an increase in the localities over all tax collections from the real estate tax, the existing real estate tax rate MUST be “rolled back” to offset the impact of the reassessment.

For example, in Hanover County our current real estate tax rate is .81. However, because of the most recent reassessment, that real estate tax rate will be reduced to .77 BY LAW to offset the impact of the reassessment. This is called the “Effective Tax Rate.”

The Effective Tax Rate will always go down if your reassessment goes up. This is intended to offset the impact of the reassessment.

If your local governing body wants to increase the revenue it collects from the real estate tax, and they almost always do, they must vote, in an open session, and following public notice and the conduction of a Public Hearing, to increase the Effective Tax Rate above its statutorial rolled back level. If they vote to do so, make no mistake, they have voted to increase your taxes.

So if your real estate assessment went up, don’t panic. That does not necessarily mean that your real estate taxes will also increase. Contact your local Board of Supervisors member. Let them know that you oppose higher real estate taxes, and as such, that you expect them to vote to maintain the rolled back tax rate, or the “Effective Tax Rate.”

And if they subsequently vote to increase your real estate taxes, make them justify that, and if you disagree with their decision, hold them accountable in the next election. After all, they do work for you!