Friday, June 1, 2018

A Good Property Tax Assessment System Allows Time-adjusted Sales Analysis and Assessment Ratios

(Click on the image to enlarge)
A good property assessment system should offer sales, county market values and assessment analyses, leading to meaningful sales and assessment ratios, along with variable valuation dates paving the way for backward and forward ratio tests.

Assuming 01-01-2018 is the taxable status date (with County Market Values and Assessments pertaining to that date), all 2017 sales have been adjusted up to that date as well, thus making the ratios comparable. In the above graphic all 2017 sales have been time-adjusted @ 6% annual growth (0.5% X 12).

The table shows the results of the sales query. The median time-adjusted sale price in Denver is $440,750, while the county's median market value is $365,000, resulting in a sales ratio (County MV/Adjusted SP) of 0.828. 

Taxing jurisdictions often statutorily value their properties at a lower rate, thus lowering the overall sales ratio. The 0.828 ratio does not signify inequity, as long as all towns within the jurisdiction are assessed around that ratio. 

This Tax Roll is extremely fair and equitable considering the 5th-to-95th percentile range is adeptly within a few basis points off the median. 

Obviously, Denver practices fractional assessment, meaning assessed value represents a (fractional) percent - 6% to be precise - of the market value.  

The accuracy of this Tax Roll makes the spatial chart almost irrelevant. Though the red (<=25th) and yellow (>=75th) balloons exist, their close proximity to the median ratio make them virtually insignificant.   

I picked the above graphics from TownAnalyst.com as I own and operate it, to avoid having to deal with any copyright issues. My TownAnalyst site is totally free (no strings) and requires no login or registration whatsoever. Anyway, please use the assessment system that works best for you.


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