Updated september 2019
Tax bills have been issued, but it’s not too late to challenge the assessment.
In Nevada, the annual property tax bills were mailed in July. Since then I’ve received calls from anxious property owners saying “this isn’t what I expected; is there anything I can do about it?” At this point some remedies are no longer available, but it is worthwhile to critically review the assessment because there are still some avenues for relief that can be pursued.
In reviewing an assessment it is important to understand that the actual tax assessed on a parcel is the result of two separate calculations. First, a gross property tax is calculated by multiplying the taxable value of a parcel by the assessment rate (35%), which is set by statute, and the tax rate for the district in which the parcel is located.
Of the three components used to calculate the gross property tax, only the taxable value can be challenged by a property owner appeal. However, for most parcels, the time to appeal the taxable value has expired. The only exceptions are situations where the secured roll published by the assessor in December of 2018 did not include the parcel at issue or the particular value that the assessment is based on. This usually occurs where a parcel has been divided to create new parcels or where there has been new construction. The taxable value of parcels that fit these exceptions can still be challenged. The petition can be filed with the county board of equalization until January 15, 2020.
Second, the gross property tax can potentially be limited by the tax cap. In Nevada, the amount taxes can increase from year to year is limited by a tax cap that applies to the tax liability, not the taxable value. The tax cap is calculated by (a) increasing the taxes paid in the preceding tax year by an applicable tax cap factor (in Clark County, the tax cap factor for the current tax year is 3% for owner occupied residential property and certain low income residential rental properties and 4.8% for all other property) and (b) adding the tax attributable to “any improvement to or change in the actual or authorized use of the property” that was not included in the assessment for the prior year. Most properties have not experienced an improvement to or change in use, so a property owner can simply compare the current year assessment to the assessment made in the preceding tax year; if the taxes have increased by more than the applicable percentage an appeal should be considered.
The tax cap also limits the taxes assessed on some new parcels; parcels that did not exist in the preceding tax year. These new parcels are identified as either new parcels for development, which do not receive any benefit from the tax cap, or remainder parcels, which do benefit from the tax cap. New parcels for development are either (a) vacant parcels which were created by a subdivision map creating individual lots for residential, commercial or industrial development or on which there has been new construction sufficient to identify the use of the property or (b) improved parcels whose primary use has changed. If neither of these conditions apply, the new parcel should be treated as a remainder parcel and, as such, it might be entitled to a tax cap abatement.
If the assessment of a parcel does not reduce the gross property tax by a tax cap abatement and the property owner believes it should, a petition can be filed with the county assessor on or before June 30, 2020.
In summary, property tax bills should be critically reviewed because some avenues for relief are still available. Reductions in the taxes assessed can be achieved by challenging the valuation of new parcels and new construction or by questioning the manner in which the tax cap abatement has been applied.
Paul D. Bancroft
American Property Tax Counsel (APTC)