Legislation passed by Georgia lawmakers in recent years has created an inequity in the way many homeowners’ properties are assessed, according to some Columbia County officials.
Assessments from government appraisers determine how much homeowners pay in property taxes. State laws that changed the way property is assessed, including previously disregarded transactions and a tax hike freeze, might have deflated the value of many homes.
When a bank forecloses, the home is sold to recoup losses, but typically at a lower price than the fair market value and even the assessed value.
“Bank sales were arms-length transactions,” said Columbia County Tax Assessor’s Office Chief Appraiser Debbie Robertson. “I guess because there were so many sales from banks (following the nationwide housing market collapse), the law changed to consider them.
“We used to throw those out as not good sales.”
A price of a home sale often influences the assessed value of nearby homes, Robertson said. If a home sells for much less than what it previously was assessed at, it can lower the assessed value of surrounding homes.
In Columbia County last year, Robertson said there were 68 such bank sales.
“It has had a tremendous effect,” she said. “We’ve lowered a lot of the (housing) markets in Columbia County in the past couple of years because of those bank sales.”
County Commissioner Ron Thigpen said the county still is faring much better than most.
“Columbia County compared to a lot of other counties in the state has had relatively few foreclosures; more than historical, but relatively few,” said the executive vice president and chief operating officer at Georgia Bank & Trust.
But Thigpen agrees that bank sales can create an unfair comparison to other homes.
“It’s not really apples and apples in terms of representing what I would consider a true market transaction,” he said. “A foreclosure in more normal times simply represents a distressed sale. It’s not a willing buyer or a willing seller.
“I discount that from a valuation standpoint.”
Though accounting for banks sales might hurt the assessments of some homeowners, state Rep. Ben Harbin said it helps many others.
“We’ve been fortunate in our area, but in higher growth areas like some around Atlanta, their values were based on future growth,” Harbin said. “When that growth didn’t occur, the values dropped dramatically.”
A home once worth $400,000 might now be appraised at only $250,000 due to a rash of nearby foreclosures; is it fair, Harbin asked, for that homeowner to continue paying property taxes on a $400,000 house?
“We don’t want people overpaying on their taxes,” he said.
Another artificial deflator of assessed property value is the current state-imposed moratorium.
The state Legislature in 2008 passed a three-year moratorium on property assessments, freezing the assessed value of property at the 2008 level.
However, the moratorium extends only to homeowners who keep their properties unchanged.
Any improvements, including remodeling or adding a swimming pool, allow the property to be reassessed. Also, if a homeowner sells, rezones, subdivides or combines one parcel with another for a new plat, the property can be reassessed.
“This bill causes major inequities in value, because some parcels are taxed on fair market value and similar parcels may be taxed on the moratorium value,” Robertson said.
For example, if a homeowner built a pool in 2008, prior to the moratorium taking effect, then the assessed value of the property remains the same today. But if a neighbor with similar property at similar value were to build an identical pool a year later, then that homeowner became subject to reassessment and likely pays more in property taxes.
Maintaining fairness should work both ways, though, Harbin said.
“If you have a $150,000 home and make $25,000 in improvements, is it fair to pay less tax than someone with a $175,000 home who has made no improvements?” Harbin asked. “You have to have some leeway.”
Though many homeowners probably like the moratorium since it keeps their property taxes from increasing, they should bear in mind that the moratorium extends to businesses.
Corporate landowners, who typically own more valuable land, don’t have to pay more property taxes as that land increases in value.
According to the county Tax Commissioner’s Office, Georgia Power owns more valuable land in Columbia County than any other entity. The fair market value on land owned by the power company is nearly $95.3 million.
However, Georgia Power pays taxes on only about $83.8 million of that property, the value of the parcels prior to the moratorium.
Still, Harbin said the legislation aids the average Georgian.
“The purpose of the legislation is to help people in difficult times; to hold them harmless so that at least they can get through these tough times, while counties get about the same revenue,” he said.
Though the moratorium is set to end this year, Robertson and Columbia County Tax Commissioner Kay Allen have speculated that state lawmakers might extend it.
Harbin believes they’re right.
“If the economy continues where it is now, which is still very stagnant, we’ll have to take a serious look at it,” he said.
Robertson believes the new legislation has helped create a buyer’s market in the county for new homeowners, but it hasn’t much helped the property values of many longtime residents.
“The thing that frustrates us is that there is not the equity that there was in the past,” she said. “In other words, people aren’t being taxed fairly.”
Harbin said he would encourage Robertson and others with qualms concerning these laws to contact their legislator.
Contact information for all state lawmakers can be found online at www.legis.ga.gov.