Notices of the new assessed values for the 2012 pay 2013 reassessment have already begun to be mailed.  Scott and Jennings Counties were the first to go out, and several have followed quickly behind them.  (See the box to the right for appeal filing deadlines.)

As we suspected the new assessed values are all over the place. Some have increased or stayed the same, but many of the new values are lower than the 2011 values. In some cases as much as 20% lower.  This is most likely due to two things:

1.  The cost tables used by the Assessors to create the values, are lower than they were in the previous reassessment.

2.  Depreciation for a property is updated during a reassessment. 

Beware of the lower assessments.  While on the surface this seems like good news, the lower assessed values may in fact cause a taxpayer to pay more next Spring when the tax bills come out.

How could this be?  It is very likely that tax rates will dramatically increase due to the lower values.  Basically here is how tax rates are calculated : The Budget Needed to Run the Taxing District, divided by The Assessed Values of the Taxing District.  Based on this calculation, if the assessed values are lower, the tax rates will have to increase in order to cover the budget needs.

What about the Tax Caps?  Most taxing districts have not yet hit their Commercial Property tax cap of 3% (More if there is an approved school referendum in the district.)

Here’s a real world example we just encountered:

2011 Assessed Value   $1,631,900

2012 Tax Bill – $31,104 based on a 1.9% tax rate

2012 Assessed Value   $1,310,700 (about a 24% decrease)

2012 pay 2013 Potential Tax Bill at 3% – $39,321

Our advice to all of our clients is to expect the best, but prepare for the worst.  Our recommendation is to set your 2013 budgets at the 3% rate.

One final word on the new values. Just because they are lower, that does not make them accurate.

Whether the value of the property has increased, decreased or stayed the same, remember that there are ONLY 45 day from the date of the notice to file an appeal.   You can’t wait until next year to see what the tax rates are.  Now is the time to act!!