When the NCDOT (or another condemning authority) is taking your land, many people want to know if the condemning authority has to pay them based on the tax value of their property.
The short answer is: no, they do not.
The slightly longer answer is: no, they do not, nor do you want them to. Here are three reasons why:
Even the NCDOT knows tax value is sometimes not accurate
That’s why they’ll bring in their own appraisers to determine the value of your property, before sending you an offer. If they’re not planning to take all of your property, they’ll determine the value before the taking, and then what they expect your property value to be after the project is completed. The difference between these two values is what they consider just compensation.
If you recently bought your property, you likely have a good idea of its worth and it may be obvious that the government’s offer has undervalued your property. But let’s face it, if you’ve owned your property for many years, you may not have the best idea of how much it is actually worth now. You know how much you paid for it, but that was years ago. If you haven’t had it recently appraised or refinanced, your best guess may be based on the tax value you see every year when you have to pay your property taxes.
Tax value is a formula – not an individual assessment
For some owners the tax value may be the same as the property’s real value, but this won’t always be (and is often not!) the case. The tax value of your property is based on a formula applied across multiple properties to make it easy for the local government to generate property tax revenue without having to go through the time and cost of appraising each and every property. This means that while some tax values reflect what the property is actually worth, others are far below and some are even more.
We often come across property owners who think they are getting a good deal merely because the condemning authority has met or exceeded tax value in their offer of just compensation. This isn’t always a good deal though.
For instance, getting $125,000 for a property with a tax value of $100,000 seems like a great deal until the owner finds out the property could have actually sold for +$150,000.
Was your tax value determined during a recession or market high?
To make matters more complicated, property tax values are determined every 8 years in North Carolina. However, the market for property often changes far more quickly than that.
If a property’s tax value was determined at the height of a recession, it is much less likely it will be an accurate reflection of value if property values have now returned to normal. Eight years is a long time in the real estate world and you should be armed with the most up-to-date information.
For these reasons we would rarely recommend settling for the tax value of your property, unless you have other information that reinforces the tax value is indeed the true value of the property.
Information like comparable sales, a full appraisal, or even a Comprehensive Value Analysis – all of which one of our attorneys can help you obtain. But whatever the route, a property owner shouldn’t blindly accept the tax value as an accurate estimate of the current value of their property.
Not sure if you’re getting a fair offer? Well, it doesn’t hurt (or cost anything) to ask one of our eminent domain attorneys. Just click here.