In 2005, the Loudoun County Assesors Office made an announcement that the goal of the county was to assess the homes in Loudoun County at 100% of their actual value. Previous to this proclamation the assessed values had lagged behind actual values by as much as 30 to 40%. This meant that a house that could safely sell for $400,000 was assessed at a value closer to $300,000.
According to the Fiscal Year 2008 Loudoun County Adopted Fiscal Plan Report, the tax assessor estimates that they will value the homes at 98.9% of their sales value in 2007. The plan also states that they project the ratio to be at 95.1% in 2008.
Let's see how accurate the estimate is for 2007 in 5 of the largest communities in Ashburn:
Ashburn Farm 97.4%
Ashburn Village 105.8%
Broadlands 105.5%
Brambleton 103.5%
Belmont 104.5%
All Homes 103.6%
These ratios reflect sales that closed thus far in the 3rd quarter of 2007. Based on these numbers it looks like the county estimate for 2007 is too low and that they will be taxing homeowners in Ashburn at more than the 100% target rate. We will follow up in other communities in subsequent posts but Ashburn represents about 30% of real estate activity in Loudoun County and is a good barometer for the county.
What this data also tells us is that for 2008, the county has somehow factored in either a price increase for homes in Loudoun County or a reduction in the assessed values. My guess is the former because reducing the assessed values would mean less revenue and they would never let that happen. And even if they did decrease assessed values, they will always offset that with an increase in the tax rate to make up the difference, just as they did last year.
Prediction: The county will leave assessed values unchanged for the most part and make only minor adjustments in some areas. Their hope will be that homeowners will be relieved that their taxes didn't go up and leave it at that. They might even try and increase the assessed values by 5% to get to their target rate of 100%. For those homeowners that challenge the county's assessment, they will rely on the fact that the process to get an assessed value changed by the county is time consuming, the window to do so is very small, and that the benefit of a slight reduction in a tax bill will not be enough to make it worthwhile.
With an average sales price of $488, 571 this year, the county will be able to assess $17,100 more per property if they leave the assessed values at the current actual rate of 103.6% versus the targeted 100%. If they raise the values by 5% from their current levels this will add another $24,428 per home. At the current tax rate of .0096 and 114,750 homes in the county, Loudoun County looks to make $18,837,360 to $45,747,244 more than the law says they should.
Note: Assessed values are calculated once a year on January 1st and are used in combination with the tax rate to determine how much a homeowner will owe in taxes for the upcoming year. Because the assessments are done on January 1st, in a declining market the ratio of assess ed value to market value will move up and eclipse the 100% mark. This does not mean the 2007 assessments were not accurate for 2007. This post was written to make homeowners aware of the declining market values and to be on the lookout for an appropriate reduction in assessed values in 2008.
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