WHY DO WE HAVE A PROPERTY TAX?

Properties are appraised so that those of us who want the advantages of having schools, fire and police protection, and other public benefits, (which means just about all of us), can absorb our fair share of the cost, in proportion to the amount of money our individual properties are worth.

The real property tax is part of a well-balanced revenue system. It is more stable than sales or income taxes because it does not fluctuate as much when communities have recessions. When the community spends your tax dollars on better schools, parks, and so on, property values generally rise.

LEGAL AUTHORITY GIVEN BY STATE TO CONDUCT REASSESSMENTS:

The Code of VA requires that all properties be assessed for taxation at 100% of market value. The same law requires Counties to assess properties on an annual or biannual. The Arlington County Board has decided that we will conduct a reassessment annually as of January 1.  During the reassessment cycle all property values are examined and adjustments made where necessary to guarantee that all property is assessed at market value. This is done to ensure that taxes are distributed equitably and uniformly.  The director of the Department of Real Estate Assessment is the assessor for the county.  All real property in Arlington County, except the property of operating railroads, interstate pipelines, and public utilities are assessed by the assessor.

WHAT IS THE DEFINITION OF MARKET VALUE?

Finding the market value of your property involves discovering the price most people would pay for it in its present condition. It's not really all that simple, however, because the assessor has to find what this value would be on every property in Arlington County (over 60,000 parcels), no matter how big or small.

But the assessors job does not stop there. Each year it has to be done all over again, because the market value of almost everything changes from one year to the next.

The definition of market value as defined by the International Association of Assessing Officers is: The most probable sale price of a property in terms of money in a competitive and open market, assuming that the buyer and seller are acting prudently and knowledgeably, allowing sufficient time for the sale, and assuming that the transaction is not affected by undue pressures.

HOW IS PROPERTY APPRAISED?

To find the value of any piece of property, the assessor must first know what properties similar to it are selling for, what it would cost to replace it today, how much it takes to operate and keep it in repair, what rent it may earn, and many other dollar facts affecting its value, such as the current rate of interest charged for borrowing money to buy or build properties like yours.

Using these facts, the assessor can then go about finding the property's value in three different ways:

Sales Comparison Approach:

The first method compares your property to others that have sold during the analysis period. These prices, however, must be analyzed very carefully to get the true picture. One property may have sold for more than it's worth because the buyer is in a hurry and would pay any price. Another may have sold for less than it was actually worth because the owner needed cash right away and the property was sold to the first person who made an offer. When using the sales comparison approach, the assessor must always consider such overpricing and underpricing and analyze many sales to arrive at a fair valuation for your property. Size, time, quality, condition, location are also important factors to consider.

Cost Approach:

A second way to value your property is based on how much money it would take, at current material and labor costs, to replace your property with one similar. If your property is not new, the assessor must also estimate how much value has been lost to wear and tear or other factors such as obsolescence. The adjustment called depreciation is then deducted from the replacement cost. Finally the assessor estimates the value of your lot and adds this to the depreciated cost to arrive at the total property value.

Income Approach:

The third way is to evaluate how much income your property would produce if it were rented as an apartment house, a store, or a factory etc.. The assessor must consider operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on your kind of property. The net income from operation of the property is then capitalized into a value estimate by using a capitalization rate that provides a return on and of the property investment. This method is seldom used to appraise single family residential properties.  Arlington County uses this approach on income producing properties such as offices, shopping centers, apartments and like properties.

 WHY DO ASSESSED VALUES CHANGE EACH REASSESSMENT?

Property values can change for many reasons. The most obvious are changes to the property itself. For example. a bedroom, garage, swimming pool or other additions, or if the property is destroyed by flood or fire.

The most frequent cause of change in value is a change in the market. When market value changes, naturally so do assessed value. People make value by their transactions in the marketplace. It is important to note that the assessor does not create this value. The assessor simply has the legal responsibility to study those transactions and appraise your property accordingly.

HOW CAN A CHANGE BE MADE WITHOUT AN INTERIOR INSPECTION?

In order to make the most accurate assessment on a building, it is desirable to see the inside and outside of the property. The Department of Real Estate Assessment keeps records on physical characteristics of each property. Even though the assessor may not have been able to go through your property, the assessment will still be reviewed, based on the existing records and sales of similar properties. The Department of Real Estate Assessment mails all new property owners an information form to fill out when they have purchased a property to verify and update our computer records so that the most accurate data can be maintained.

DO YOU HAVE TO LET THE ASSESSOR IN WHEN AN INSPECTION IS REQUESTED?

No. However, when an interior inspection is not allowed, the assessor will attempt to update the records by looking at the outside of the property and using any other information available. To ensure an accurate assessment, it is to your advantage to allow the assessor inside your property if requested.

When reviewing properties in the Arlington County where the owner is not at home, the assessor will leave an information request on your door, if information is needed. You may then call the assessors office with the information.

HOW CAN MY ASSESSMENT CHANGE IF I HAVEN'T DONE ANYTHING TO MY PROPERTY?

While improvements to property obviously bring changes in values, sometimes just general economic conditions can affect property values. Supply and demand and interest rates, inflation rates and changes in laws can influence the value of real estate. Those resulting value changes must be reflected in the assessments.

WHY DO SOME PROPERTIES INCREASE MORE THAN OTHER PROPERTIES?

There are differences between individual properties and between neighborhoods. One neighborhood may have sales that indicate a substantial increase in value, while sales in another may not reflect any change at all. Different types of properties within the same neighborhoods may also show different value changes. For example, one story houses may be in larger demand than two story houses, or vice versa. Older home values might rise slower than newer homes.

There are numerous factors to be considered by the assessor when reviewing property values, thus causing different areas and types of properties to change values at different rates.

WHAT IF YOU ARE ASSESSED FAIRLY, BUT YOU FEEL THAT YOUR TAXES ARE TOO HIGH?

Assessors do not determine your property taxes; the assessor’s job is to ensure that the assessment is fair and equitable.  If you feel as though your assessment accurately reflects the market value of your property during the assessment analysis period, but you still feel that your property taxes are rising unfairly, you may wish to address this matter with the Arlington County Board - that impose taxes in the county. The assessor cannot assist you with tax matters, but only with matters pertaining to the assessed value of your property.

WHAT DETERMINES THE AMOUNT OF TAX LEVIED ON A PROERTY?

The real estate tax rate determines the amount of the tax which is levied on the property.  A uniform tax rate for all real property is set by the Arlington County Board.

Tax rates in Arlington are expressed in dollars per one hundred dollars of assessed value.  For example, in 2012 a tax rate of 97.1 cents per $100.00 would result in a real estate tax of $3,884 on a property assessed at $400,000.

WHAT IS A REAL ESTATE LAND BOOK?

Real estate assessments are a matter of public record; for each parcel of real estate, the name of the owner(s), the amount of the assessment, and the taxes levied are recorded in the Land Book.

Copies of the Land Book are kept in the offices of the Department of Real Estate Assessments, the Treasurer of Arlington County, and the Clerk of the Circuit Court.  Anyone is free to examine these books to compare assessments and taxes of properties.

Most of the information contained in the records of the Department of Real Estate Assessments is public information and is available for inspection.  For each property this information includes such things as the record of ownership, source of title, sales prices and dates, legal descriptions, physical descriptions of the land and buildings, and a history of assessment.

Computers located within the Department of Real Estate Assessments and at the Arlington Central Library are available for use by the public to access records.  Additionally, CDs listing all properties by address or owner's name are available at a nominal cost from the Department of Real Estate Assessments.