Understanding Revaluation in a Declining Market

With 48 towns going through revaluation last year, another 39 scheduled for this year, including Farmington, the reality of declining property values and fluctuations in neighborhood and property type values has many taxpayers shaking there had and wondering if they are being unfairly taxed. This article hopefully will shed some light on that.

The first thing to understand is that your assessment in and of itself has no effect on the taxes you pay. What really affect’s your real estate taxes is how your assessment relates to other properties both commercial and residential, and how all those assessments as a whole relate to the amount of personal property and motor vehicle values in your town to make up the Grand List.

This is because the taxes you pay is a simple formula of your mill rate times your assessment.    So if your assessment is $100,000 and your mill rate is 50 you are paying the same amount as if your assessment is $1,000,000 and your mill rate is 5.

The question becomes what determines the mill rate? That also is a pretty basic calculation. You take the towns budget divide it into the grand list, then divide by 1,000 and you have your mill rate ( in reality it isn’t that simple as a town has other income such as state and federal subsidies and grants, investment income and possibly reserves if they choose to use them, that would reduce the budget amount that has to be applied against the grand list).

Since the majority of income Connecticut towns receive comes from the grand list (real estate made up typically between 80% and 95%) most of the budget burden falls on it.

Connecticut mandates that properties be assessed at 70% of market value. It further requires that every town perform a revaluation every five years with at least every other one entailing measuring and listing all real property.

(To read the rest of the article you can go to http://rapidappraisalinc.com/understanding-revaluation-in-a-declining-market/ )