How real estate taxes are assessed

The intent and purpose of the laws of this state [Georgia] are to have all property and subjects of taxation returned at the value which would be realized from the cash sale, but not the forced sale, of the property and subjects as such property and subjects are usually sold except as otherwise provided in this chapter. (O.C.G.A. § 48-5-1)

In Georgia property is required to be assessed at 40% of the fair market value unless otherwise specified by law. (O.C.G.A. § 48-5-7) Property is assessed at the county level by the Board of Tax Assessors. The State Revenue Commissioner is responsible for examining the digests of counties in Georgia in order to determine that property is assessed uniformly and equally between and within the counties. (O.C.G.A. § 48-5-340)

The tax bills received by property owners from the counties will include both the fair market value and the assessed value of the property. Fair market value means "the amount a knowledgeable buyer would pay for the property and a willing seller would accept for the property at an arm's length, bona fide sale." (O.C.G.A. § 48-5-2)

The purpose of the digest review procedure is to equalize county property tax digests between and within the counties. This procedure is designed to require the county boards of tax assessors to make adjustments in the valuation of property to ensure uniformity and equity. The Revenue Commissioner can use any reasonable measure in order to accomplish uniformity. O.C.G.A. § 48-5-340

A county’s digest is approved in their digest review year if the digest meets the following criteria:
* The average assessment ratio for each class of property shall be reasonably close to the assessments provided for in O.C.G.A. § 48-5-7 which is a 40% assessment for most real and personal property.
* The average assessment variance for each class of property shall not be excessive.
* The assessment ratios of the properties shall not reveal any significant assessment bias.

Every property sold on your street and surrounding neighborhood (new construction or rehabilitated) impact how the county and city must assess your property values. A study conducted by Rutgers University on several Texas cities addresses the impact of historic districts to improved property values, (which by law in Georgia would mean increased taxes), improved property tax collection, and displacement of elderly and poor (gentrification). The interesting part is the ability to justify adjustments of real estate taxes on the elderly and poor in historic districts. http://geography.rutgers.edu/people/faculty/leichenko/leichenko_coulson_listokin2001.pdf

"Our findings also have implications for the granting of special property tax incentives for the rehabilitation of designated properties. The policy of granting exemptions or abatements is quite common (Beaumont,1996; Listokin et al., 1982). Our finding that designation enhances property values (in part due to the encouragement of rehabilitation) partially supports such a policy. The rise in property values ultimately means higher property taxes and, given that, landmark owners might hesitate to engage in rehabilitation in the absence of exemptions/abatements. Yet, there is a counter-interpretation. Given property appreciation, must the public sector give tax-breaks to landmark owners? Or, if this incentive is extended, perhaps it should be means-tested—that is, limited to the less affluent. Such a policy would dampen displacement pressures and it would also target assistance to where it is needed."

Please refer back to the previously mentioned study on Philadelphia posted June 25, 2007. That study found that local historic districts retain the cultural and racial mix representative of the city. That is really positive evidence that the proposed local historic district could help us retain the diversity of our community.