The artificial value of the property for tax purposes was intended to make sure an owner is not taxed out of a home where he has lived for many years. This bill would protect rapidly appreciating property from ever being taxed at 100 percent of its value and shifts more of the cost of city, county and school operations to businesses and owners of slowly appreciating property.
Here’s an example:
Property on the tax rolls at $100,000 and sold for $125,000 would have its property value adjusted for tax purposes at the time of sale to $115,000. At reassessment, the property value could not increase more than 15 percent over the $115,000.
- This change in tax law affects revenue streams in cities, counties and schools.
- The Board of Economic Advisors estimates the annual cost to local governments if this changes goes through to be $44 million - $19.6 million from schools, $16.1 million from counties and $8.3 million from cities.
- New construction isn’t covered by this tax break. Buyers of new construction would pay taxes on the full value of their home while buyers of existing properties would pay taxes only on the value of the home capped at 15 percent over five years.