Clark County now has a 3% per year cap for tax increases for primary residences, and an 8% per year cap for many other types of properties, approved at the last legislative session, and based on a base rate of the property's 2004-2005 taxes. That cap rate, in conjunction with the huge run up in property valuations, make for some interesting speculation on exactly what we will pay in property taxes.
The property tax cap is based on the amount of taxes billed, and does not limit the amount of increase in assessed value of the property. So while the assessed value could keep climbing at a huge rate, you taxes could only go up 3% per year. Of course, they could go up 3% year after year and never reach the actual tax figure.
For example: one home we know of worth about $525,000 has a tax of $5137.78, based on the current assessed value. However, their cap rate reduction is $2033.64, so this tax year they owe $3084.14. If the tax due increases at 3% each year, it will take somewhere in the neighborhood of 18 years for the owner to pay the actual tax amount. However, if the tax value goes up again during that time, as they most likely will, the capped taxes paid may not ever catch up with the tax amount, as long as the owner lives in the home.
One fact we tried to determine: if the current home owner sells his home to another owner occupant, does his tax rate start at the higher amount, or does it continue based on the amount the old owner was paying, plus the 3% per year.
After several confusing conversations with the assessor's office, our understanding is the new owner's tax stays the same as the old owner's, with the 3% increase per year. If they are charged more than that, they can appeal and have it reduced to the lower amount. A title officer we questioned laughed and said "If you ask three different people, you get three different answers. My experience is they charge the un-capped rate to the new owner."
Purchasers of new homes will be assessed the full value of the home at the first assessment period after the home is purchased.
We, of course, are not property tax experts or attorneys, but thought we would share this research with you on this topic. Please give us your comments on your experiences.
Oh, and by the way, if prices go down will the assessed taxes go down, and the cap rate with them, or will we all just reach our break-even point sooner.
Thank you Donna Hodge for the detailed time spent researching this!