Agenda - 12-1-14 Reg. Meeting - Laserfiche WebLink

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040 INTRODUCTION North Carolina is a "Dillon's Rule" state meaning that the only power a local government has is that which is given to it by the State. All counties in North Carolina abide by the same State tax laws, and no local government can set its own tax law. The Machinery Act, chapter 105 of the North Carolina General Statutes, gives property taxation powers to North Carolina local governments. While some states value different classes of property at different rates, i.e. 500 of market value for commercial property, 25% of market value for residential property, etc., North Carolina values all property classifications at 100% of market value. That is, 100% of market value as of the date of last revaluation. Similarly, North Carolina law dictates that a jurisdiction's tax rate be set and applied to all property classes uniformly. While some may argue that it be done differently, the positive side of this approach is transparency. Here, in North Carolina, tax assessed value and its methodology are lucid. The Lee County Tax Office Real Property Appraisal Division (hereinafter "Division ") assesses real property for purposes of property taxation. Each year staff appraisers review building permits for new homes, changes /additions to structures and garages. Such property changes are noted on the property record card and their condition as of January 1 51 is assessed. The schedule of values from the most recent revaluation is applied to these properties. For example, if a house were built in August of 2014, then its tax assessment would reflect its market value as of January 1, 2013, not necessarily current market value. While the house technically did not exist in 2013 — because it was built in 2014 — the 2013 schedule of values would be applied to this property. It sometimes is confusing for one to understand a tax assessment. In November 2014 a taxpayer might have refinanced a home in the Tramway area, for example, and the appraisal provided on behalf of the mortgage company indicates a market value of $285,000. Hypothetically, the current tax assessment on that same property might be $250,000. Why are the values different? A basic answer is that the two value estimates are like comparing apples and oranges. The refinance appraisal of $285,000 in November of 2014 is the property's value as of that date, specifically, while the tax assessment is the property's value as of January 1, 2013. The county tax assessor is prohibited from adjusting a tax assessment in a non - revaluation year due to changes in the economy, positive or negative. Staff appraisers monitor market conditions on a regular basis in preparation for the next countywide revaluation. The Division subscribes to the Sanford Area Multiple Listing Service, and it evaluates sales through deed transfers and other sources. Sales are qualified or disqualified based on appraisal industry standards. The qualification process may involve visiting abnormal market transactions to determine its qualification status. Only qualified sales are used to determine assessment uniformity and accuracy. In recent years Lee County, much like the rest of the state, has experienced an upward trend in the number of foreclosure sales occurring in the market. Across the appraisal profession, these are not deemed "arms- length transactions" and are not used in estimating market values. Foreclosure sales typically carry an increased risk for the purchaser. Business and economic principles tell us that when there is an increased risk, there also should be an increased expected return on investment. An atypical