Charlotte’s blistering housing market brings with it both good news and bad news.
The good: Homes are rapidly appreciating in value, helping homeowners build equity and make a bundle when they sell.
The bad: The government wants its share.
This month, Charlotte homeowners will receive notice from Mecklenburg County of what the county’s tax assessors have determined their property’s value to be. They might get some sticker shock: This will be the first revaluation since the depths of the recession.
Here are the basics of what you need to know about the tax revaluation and what it means for you.
What is a tax valuation?
City and county governments make the most of their money from property taxes, or taxes calculated based on what a person or business’s real estate holdings are worth. To determine how much to collect, Mecklenburg County has a whole office dedicated to valuing properties. They physically drive around to inspect neighborhoods and analyze current market data.
This is called a tax valuation because it’s the property’s value for tax purposes. The entire county gets a new value at the same time on a published schedule.
Why is this happening now?
Under North Carolina law, counties are required to revalue properties at least every eight years. Some do it more often, but for now at least, Mecklenburg County is not one of them.
The last property tax revaluation in Mecklenburg County was in 2011.
When do I pay?
It’s important to note that the letter you’ll get in your mailbox this month is not a bill. Nothing is due right away.
Actual tax bills will go out starting July 19, 2019. Your taxes will be due September 1, 2019, and must be paid by January 7, 2020 or else you’ll start incurring late fees.
Eventually, if you don’t pay your taxes, the county will foreclose on and seize your house.
How much are valuations expected to change?
According to the tax assessor’s office, the total value of Mecklenburg County property has increased more than 50% since the last revaluation.
Some properties will be more affected than others. The average residential property value increased by 40%. But the average commercial property value increased by a whopping 78%.
Does this mean I’ll pay more taxes?
Not automatically. The tax value and tax rate are different things and determined at different times. You have to multiply the tax value by the tax rate to get the total taxes you’ll pay.
What’s the current tax rate?
Our property taxes are calculated based on a percentage of our property’s value. This is usually expressed as pennies per $100 in value.
Mecklenburg County’s tax rate is currently at $0.8232 per $100 of assessed value. The city of Charlotte’s tax rate is currently at $0.4887 per $100 of assessed value.
If you live in Charlotte, you pay both taxes. That means your total property taxes were $1.3119 per $100 of assessed value.
Here’s a real-world example: If your house was valued at $200,000, you paid $1,646.40 county taxes and $977.40 for city of Charlotte taxes in 2018.
How much in property taxes do Charlotte and Mecklenburg County collect?
Your property tax bill from Mecklenburg County will cover both county taxes and municipal taxes, if you’re within the city of Charlotte or one of its suburban towns.
Mecklenburg County collected just under $1.1 billion in property taxes in 2018. That made up 60% of the county’s revenue.
The city of Charlotte collected about $861 million in property taxes. That made up 33% of the city’s revenue, though this is a litle misleading because the city controls the airport and that contributes 25% of the city’s revenue.
Where does all this money go?
Here’s where the county spent tax dollars in 2018:
Here’s where the city spent tax dollars:
Where specifically the new tax money will go is yet to be determined. Both the Charlotte City Council and Mecklenburg County Board of Commissioners have yet to determine what the tax rate will be under the new revaluation.
This process will begin in spring 2019.
What options do the city and county have?
Counties are required by law to publish what is known as the “revenue neutral” rate, or the tax rate cities and counties could adopt to keep their tax revenue the same when accounting for the new valuation.
In Mecklenburg County, this would mean a dramatically lower tax rate to keep things even with the 50% increase in valuation.
However, cites and counties are not required to actually adopt the revenue neutral rate. They can set whatever tax rate they want, as voted on by the City Council or Board of County Commissioners in their annual budget process.
Elected officials will weigh how much additional money they’d like to collect and spend.
How can I weigh in on this?
You’ll have the opportunity to voice your opinion on where Charlotte and Mecklenburg County’s tax rate should go this spring. Both will hold public hearings after publishing a proposal.
You’ll be able to sign up for a time slot to speak publicly on it, or you can email your representatives.
If you need to find out who your district rep is, you can do so here.
How can I fight my new assessment?
Once you get your tax valuation in the mail, you have the opportunity to appeal it if you believe it’s too high.
An informal appeals process starts in late January. This is when you ask county tax assessor staff to take a second look at your specific property. You can do this online.
The formal appeal process is in April and May. You can submit a formal appeal via a paper or online form. If you take this route, your case will go in front of a body called the Board of Equalization and Review. This is a group of appointed experts who will hear your argument for why your property should have a lower value and will vote on it.
This can get pretty serious. Big businesses hire high-powered lawyers to argue for lower valuations because they’re talking about differences in millions of dollars in taxes. But you’re welcome to do the same.
The Board of Equalization and Review is expected to finish up by May 20, 2019 — so if you appeal after that, you’re out of luck.
What should I expect to happen?
Expect to receive a much higher property tax valuation. Then expect both the City Council and Board of County Commissioners to use the opportunity to raise taxes.
While both bodies are almost certain to lower the tax rate from where it is now, they’ll both likely come in above the revenue neutral rate. This means your tax bill will go up.