≡ Menu

My Annual Property Tax Gripe

{ 98 comments }

Complaining about property taxUgh! I got our property tax bills a few days ago and I am hopping mad. For 2018, our property taxes will increase from $15,984 to $17,722. That’s 11% increase or $1,738 more. I knew that property tax always goes up, but I still get a little angry every year when I see the new bills. It’s annoying because our quality of life hasn’t improved at all with these tax increases. The city is full of homeless camps, the traffic is in gridlock all the time, and Portland’s high school graduation rate is still subpar at 75%. Our state’s graduation rate is even more dismal at 74%, that’s 3rd worse in the nation. Why the heck is property tax going up so much when everything is getting worse? Well, I’m exaggerating a bit. Portland QoL isn’t getting worse, but it isn’t improving much either. Not 11% anyway.

Property Tax Rule

Our property tax rule is a bit complicated, but I’ll try to explain it simply. In the 1997, the taxable value of properties were frozen and this “assessed value” can increase only 3% every year. The property tax is based on the assessed value and most homeowners pay a little more taxes every year. The city can reassess a home when the homeowner makes major improvements such as a basement refinishing or a kitchen remodel. Reassessment usually means the AV and property tax will increase.

Property tax can also increase when voters pass various bonds.

We’ll take a look at our duplex as an example.

DuplexAVProperty tax
2017$284,000$6,689
2018$292,520$7,310

The AV increased 3%, but the tax increased 9%. This increase is due to 2 bonds that passed in 2017. A $750 million school bond and a $250 million affordable housing bond. Voters passed these bonds and everyone will have to pay for them. Even renters will feel the effect of the property tax increase because rent will go up. Landlords can’t eat all these increases. Our property tax, insurance, and HOA fee have all increased over the last 12 months.

Note: The AV is usually much lower than the real value of a property because the increase is capped to 3% annually. I’ll ignore the “real market value” for now because I don’t want to complicate the issue further. The property is often reassessed when it is sold, but if there are no major improvements, then the AV won’t increase over 3%.

My main complaint this year

I’m not happy with 9% property tax increase at the duplex, but I can take it. I voted for the school bond and I knew that would increase the property tax. Hell, the city is going to completely rebuild our high school and RB40Jr will go to a modern high school when he gets there. That’s not a bad deal for us. Many of our schools are very old and the bond will update them.

However, I am not happy about our 1BD/1BA rental condo. Check it out.

1BD/1BA CondoAVProperty tax
2017$228,930$3,724
2018$263,460$4,320

The AV increased 15% and the tax increased 16%! What the heck happened to the 3% cap? We haven’t done any remodeling so I have no idea why they increased our AV so much. I checked with some neighbors and their AV increased just 3%. I’m definitely going down to the property tax office this year to appeal the increase. Of course, there is a $30 filing fee, but I’ll take my chances.

The property tax increase is a big burden on this condo because the rent is already pretty high. I’m having a hard time finding a new tenant with higher rent. This unit was breaking even last year, but we’ll have negative cash flow next year with increasing property tax, insurance, and HOA fee. I was planning to rent this unit out for 2 more years until the new building next door finishes, but this increase is changing my mind. Now, I’m going to post it for sale and for rent. If I can find a new tenant, that’s fine, but I’m okay with selling and taking profit as well.

Investing elsewhere

If we sell and take profit, we’ll have around $100,000 to invest after fees and a ton of tax*. I can invest with RealtyShares and generate around 8-10% per year. The income would improve our cash flow quite a bit. We’d miss out on the appreciation, but that is slowing down anyway. I doubt the price will increase much for this condo over the next few years. There is a frenzy of new construction going on in Portland and thousands of units will come on line over the next few years. I talked to a couple of real estate people and they confirmed that the local market is softening.

*I ran a preliminary calculation and it looks like we have to pay about $17,000 in transaction fees and about $40,000 in capital gain taxes. That bites. We could do a 1031 exchange to save on tax, but I don’t really want to deal with another rental in Portland at this time. Maybe I’d go for it if the real estate crashes again, but not now.

Property Tax Charts

This chart below shows the history of the taxes on our properties.

RB40 property tax

We’re paying more and more property tax every year. At this rate, we’ll hit $20,000 per year very soon if nothing changes. The best deal here is our duplex. Compared to the condos, we aren’t paying that much at all per sq ft. The duplex is about twice as big as our home and the property tax is about 20% higher. Our home and the 1BD/1BA condo were remodeled in 2006 and reassessed. The duplex hasn’t had a major remodel since the 80s and the AV increased at a steady 3%.

Assessed Value Chart

The chart below shows the AV of our properties.

RB40 AV

This AV value for the 1BD/1BA is very strange. It took a big dip in 2011 and recently increased at a much higher rate. The AV for the other 2 properties looks pretty normal.

Another strange thing is that the property tax on the 1BD/1BA hasn’t increased as much as the AV. If you look at the previous chart, the property tax for the 1BD/1BA has been pretty reasonable. The 15% increase this year is abnormal.

Real Market Value Chart

Just for fun, we’ll look at the “real market value” as well. This is the city’s best guess at what a property is really worth.

RB40 RMV

Ah-Ha! The old light bulb just went on. The property tax for the 1BD/1BA must be based on RMV. Here is the full tax code from the city’s website.

How are my property taxes calculated?

Two calculations are performed each year to determine your property tax amount. The tax bill is always the lower of these two amounts:

  1. Your Assessed Value is multiplied by the tax rate for your code area, and any Special Assessments are added.
  2. Your Real Market Value is multiplied by the Measure 5 limits of $5 per $1000 for Education taxes (or .005 x RMV) and $10 per $1000 for General Government taxes (or .010 x RMV).  This amount is then added to the amount for items that are excluded from the Measure 5 limits.

I usually ignore rule #2 because RMV is normally much higher than AV. Our primary residence and duplex have low AV and the property taxes are calculated with rule #1. The 1BD/1BA has ridiculous AV so it falls under rule #2. Yeap, it’s time to go in to appeal to the board.

The RMV for our primary residence is also too high. I’d be happy to sell the place for $400,000. There is no way we’d get $500,000 for this home. I’ll just appeal both properties. Wish me luck.

How about you? Do you get psychotic every time you see your new property tax bill?

***If you want to invest in real estate, but don’t want to be a landlord, check out RealtyShares. You can generate very nice passive income from funding different real estate projects like apartments, offices, restaurants, and single family homes. See how I’m doing with my real estate crowdfunding investment.

Get update via email:
Sign up to receive new articles via email
We hate spam just as much as you
{ 98 comments… add one }
  • Ms. Frugal Asian Finance October 23, 2017, 5:44 am

    I’m sorry to hear about the property tax increase. 16% does sound higher than the average, especially when your neighbors’ rates were only 3%. I really like that you took the matter into your own hand and are going to file a complaint at the property tax office. $30 is not a small amount, but it can bring your property tax down quite a bit.

    I hope it will all work out. 🙂

    • retirebyforty October 23, 2017, 8:23 am

      I think we have a good chance of getting a reduction. The increase doesn’t make any sense to me. I’ve appealed before and won so it should be okay. Thanks.

      • Angela @ Tread Lightly, Retire Early October 23, 2017, 9:03 am

        It seems like almost every time I’ve heard of a property tax being appealed, the appeal has been won. Which is a bit telling in and of itself. If the county always accepts the appeal, doesn’t that mean they know it’s high to begin with? Seems a bit off to me.

        • retirebyforty October 23, 2017, 11:30 am

          I usually don’t appeal if it’s a bit off. I assume most homeowners think the same way. It’s a pain to file and go talk to the board. However, it’s worth it if the hike is abnormal.

  • Adam October 23, 2017, 5:48 am

    My wife and I bought in a relatively low-priced area near DC. In the last seven years, it’s become a more desirable place to live (great neighbors, beer gardens, excellent and responsive city-level government, very walkable, schools still sketchy). Our property tax now is $3,904; it seems to go up a couple hundred bucks every year. I figure our amenities are well worth the cost.

    I’m sure if we had overextended ourselves buying somewhere pricier, or if we owned investment properties, I’d be right there with you carrying pitchforks and torches. For this and many other reasons, I’m not cut out to landlord. I hope your condo monetization works out well!

    • retirebyforty October 23, 2017, 8:25 am

      A couple hundred bucks every year is not too bad. I can handle that. Double digit % increase isn’t okay. That’s much higher than inflation. What about fixed income retirees? This is one of the reasons why people are becoming homeless.

  • Lily @ The Frugal Gene October 23, 2017, 6:06 am

    I’m so sorry you have to deal with this Joe. And I relate as a fellow PNWer, there’s buckets on homeless camps setting up in Seattle as well. All that money on an inefficient program, years later, the homeless program is worst.

    They’re also using property taxes to cover for the light rail systems being built. I don’t think a 11% jump would be too far in our future at this rate. I think we’re getting it at 6% jump this year. Oregon has state tax but no sales tax right?

    I feel like I could be writing this post myself in a few years time, contemplating on selling than dealing with it all…landlordin’ is harddd.

    • retirebyforty October 23, 2017, 8:27 am

      Yeap. The county built a jail and never opened it up for use. Residents said we should convert it into a homeless shelter, but they won’t do it. They are wasting money everywhere. I guess 6% isn’t too bad. That’s still double the inflation.
      You’re right about the income and sales tax. I’d much prefer sales tax than income tax. You have more control over spending.

  • gayle October 23, 2017, 6:18 am

    I feel your pain ! We near Chicago and they just keep going up ! I also have a few rentals in area and not making much at all. One is in the best part of Chicago only make about $200 cash flow monthly , might sell ! Where can one go now to escape the high taxes ?

    • retirebyforty October 23, 2017, 8:28 am

      It really bites when a rental isn’t making much cash flow and the tax increases. The rent will go up too. Escape? Hawaii has pretty low property tax. 🙂

  • Jason@WinningPersonalFinance October 23, 2017, 6:30 am

    I agree with your decision to try to appeal. It’s a low risk with potential high reward. Certainly worth a shot. I was very focused on the tax cost of my home when I purchased it and would be very frustrated if there was a large increase.

  • Jim @ Route To Retire October 23, 2017, 6:41 am

    Wow, that sucks, Joe! I haven’t had that big of a jump on our properties (so far!). However, I have successfully appealed the appraised value of our house a few years ago and was able to bring our taxes down. Is that even a possibility or are you pretty equal to the comps in the area?

    — Jim

    • retirebyforty October 23, 2017, 8:29 am

      I have appealed before and got an adjustment. We should be able to do the same this year. I think they are comparing us to more expensive units in the area. The comps aren’t equal.

  • Mrs. Groovy October 23, 2017, 6:42 am

    I’d appeal the rental increase too, just on principle. But personally I ‘d be inclined to sell it and invest elsewhere.

    I feel for you on your home. We went bat-sh*t crazy when our taxes went up on our 1 BR condo in NY from $3K+ to $5K+. It wasn’t the main reason we left but it was the straw that broke the camel’s back. P.S. when I was younger, there were years I barely earned as much as you, and some of our friends in NY, still pay in taxes.

    • retirebyforty October 23, 2017, 8:30 am

      Wow, $5k on a 1BD condo. That’s expensive. Yeap, I went a bit crazy when I got the bill too. This place is going on the market…

  • Krystal // The Krystal Diaries October 23, 2017, 6:51 am

    I hate when I get my property tax bill! The taxes in NY are no better and the increases each year have been large but the quality of life hasn’t gotten better. We grieve our taxes each year and the assessed value but it never gets approved. The area I’m in also has a lot of government corruption with a lot of officials being arrested for fraud so I’m sure that’s contributing to our high tax increases.

    • retirebyforty October 23, 2017, 8:31 am

      Ugh! Sorry to hear that. Corruption is even worse than incompetency. Or maybe about on par. I think Portland is more in the incompetence camp than the corruption camp…

  • Mr. Tako October 23, 2017, 7:00 am

    I hear you Joe, property tax increases are horrible up north in the Seattle area as well. I think my property taxes went up 11% last year. It’s crazy.

    I tell myself “it’ll all be OK” because the value of the property has been increasing at rates faster than 11%, but in the end I suspect it’ll be a wash.

    • retirebyforty October 23, 2017, 8:32 am

      11% increase is a lot. Did you guys pass an expensive bond or something like that? You guys have a similar AV increase cap, right?

  • duffy October 23, 2017, 7:03 am

    if you can prove the percentages you have a case if the law is 3%.

    BUT, government assessments of properties typically are about 75% of actual market value so you run a risk with re-assessment. Most government assessors don’t look at individual properties, they do what’s call a block appraisal and lump a whole bunch of similar properties in the area together. it is possible that your property was lumped-in with high-value/better properties. If you can show why your’s is not comparable/lower in value you have a better case.

    If your recent purchase price (or a similar/comparable property in the neighborhood) is significantly lower than the assessment then you are bound to get a reduction.

    You might want to consider going to a taxpayer/consumer protection advocate if your initial appeals fall on deaf ears. Even a local news group if they are totally ignoring the 3% law.

    Good luck!

    • retirebyforty October 23, 2017, 8:33 am

      They have been raising the AV more than 3% over the last few years, usually 4-5%. This year is pretty crazy at 15%. It’s probably some sort of miscalculation. I’ll appeal and should get a reduction.
      Thanks!

      • Chadnudj October 25, 2017, 6:54 am

        I commented below, but I’ll do so here again. The property tax increase on your rental might have been more than 3% because the 3% only applies to primary residences and not rental/investment properties. I’d check the fine print — in FL, we have a homestead exemption that caps increases on primary residences, but not on rentals. It might be what’s in play here.

  • Financial Samurai October 23, 2017, 7:03 am

    Wow! That’s percentage increases are huge!

    In San Francisco, we really cannot have an increase of more than 2% or so on an assessed value kept that can on my go up by 2% a year as well.

    For example, I was paying $22,000 a year and property tax for a home that was assessed at $1.87 million. But I thought that was too much, so I finally sold the house. I sold it for 2.74 million, which is a relief, but the new buyer now has to pay over $30,000 a year in property taxes. So I guess I was getting $8000 a year “discount.”

    But to pay $16,000 or more year in property taxes on a home that only cost $650,000 a year seems ludicrous.

    • retirebyforty October 23, 2017, 8:36 am

      You guys get reassessed when you sell. That’s a big increase from $22,000 to $30,000+.
      At least here, the AV stays pretty much the same when we sell. It only changes if there was a big remodel.

      • Matt October 23, 2017, 11:51 am

        It is the same. Taxes and assessed value are based on purchase price.

  • Mr. Groovy October 23, 2017, 7:04 am

    Arrggghhhh! I feel your pain, Joe. And you’re absolutely right. The increase in property taxes never seems to bring about a proportional increase in quality of life. Right now, property taxes in North Carolina aren’t a major irritant. They didn’t surpass the $2K mark on our 2,000 sq ft home until a couple of years ago. They’re currently under $2,100. So compared to you and nearly everyone else in high-cost cities/states, my taxes are a bargain. I’m with Mrs. G on this one. It may be time to sell the rentals and put the profits toward REITs or other–sorry for the pun–less taxing investments. Best of luck, my friend.

    • retirebyforty October 23, 2017, 8:37 am

      I’m starting to like North Carolina more and more. The cost of living is so much less than here. I’m really thinking about moving, but it might have to wait until our kid is done with high school. We like the area, but the COL is increasing too rapidly.

  • Steve @ familyonfire.org October 23, 2017, 7:06 am

    Having moved to PDX over the summer we received our property tax bill over the weekend too. I was a bit surprised to find the whole thing was due in *3 weeks*! So this meant a bit of scrambling over the weekend to liquify some assets.

    Looks like you can pay in instalments but you save 3% by paying in one chunk. We also own our home outright. The increase was 17% on the previous year and the last owner. I guess they took the change in deed as in excuse to hike the rate.

    • retirebyforty October 23, 2017, 8:38 am

      We’ve saved up so we’re ready to pay. It would be a big surprise if we just moved here. You’re right. It shouldn’t increase 17%, that’s a lot. Did they do some remodeling?

    • Andi Blackwell October 23, 2017, 6:33 pm

      Steve, In the PDX area we are seeing post closing tax hikes more often when the tax records don’t match the listing information. For example, the county never updated the tax records and the house shows as a 2 bedroom 1 bathroom, was remodeled in the 70s/80s and the county never re-assessed. Low and behold it’s now sold as a 3 bedroom 2 bathroom and the county uses the online data. It’s also happening based on pictures of remodels which is wholly unfair because real estate pictures are not generally a good indicator of reality. Lastly, if a tax assessor visits you, you are not actually obligated to let them in. If you decide to make an appeal, let me know and I’ll do what I can to help. (Local Realtor)

  • Dave @ Married with Money October 23, 2017, 7:38 am

    Yuck.

    I’m in a very interesting spot right now with property taxes. 🙂 Since we’re a brand new construction, we don’t have an assessed value according to the city. That means that for 2018 we’ll just be taxed on our land value, which will be about $100/month or so. The low rate (I expect it to be closer to $6k annually in 2019) will let us allocate quite a bit more money each month toward paying down principal or invest (we’re going to pay down principal, but plans can always change month to month).

    Not looking forward to that increase, but it’s for a good reason obviously haha.

    • retirebyforty October 23, 2017, 8:39 am

      Score! Enjoy the low tax while you can. 🙂

  • Brad - MaximizeYourMoney.com October 23, 2017, 7:55 am

    Wow. That sucks. Just got our property tax bill and it’s $1300. I was annoyed by that cost – until I read this post. :-/

    • retirebyforty October 23, 2017, 8:40 am

      $1,300 is really cheap. We’ve got to reconsider living here…

  • Pennypincher October 23, 2017, 7:57 am

    Can I say a few things here? Oh, what the property tax payers don’t know. Cities, towns, municipalities SPEND and WASTE a lot of our $$. If you go to any of the meetings, you will know this. But everyone is too busy working hard to pay the taxes instead of attending these!! You should see the waste in our town. I’ll spare you the ugly details.
    Paying taxes is like a second mortgage. Are any of us going to lay in bed in the nursing home and say, why did I pay so much in property taxes? I probably will-ha,ha!
    Take a hard look at what you are paying for. Everything! Pensions, employee benefits, etc. etc. Then their are the ”tax takers” not paying anything. We are the tax givers.
    Why do you think people move in droves to those states w/low taxes-Arizona, Fla., Nevada?
    Joe, do you ever think you may be better off simplifying and getting rid of some of your tax burdens? Simplify! : )

    • retirebyforty October 23, 2017, 8:41 am

      You’re absolutely correct. I don’t go to the meetings, but I read about plenty of wastage. That’s government for ya. We’ll start to simplify soon. It’s been good to be property owners, but the market is slowing down. Time to take some profit and simplify.

  • Andrew@LivingRichCheaply October 23, 2017, 8:02 am

    Have you tried to contest the property tax bill? It does make sense to sell the rental if it’s barely breaking even…unless you think there will be more appreciation coming in the next few years in Portland.

    • retirebyforty October 23, 2017, 8:42 am

      I’ve appealed before and got a reduction. Selling is probably the best option at this point. We’ll pay plenty of capital gains when it sells, though. You can’t escape tax.

      • Andrew October 25, 2017, 10:52 am

        What if you do a 1031 exchange to defer the taxes? I guess you’d have to buy another property though and I’m not sure you want to.

  • Tom October 23, 2017, 8:13 am

    Joe, This is one of my favorite areas to rant about. My feelings are very similar to yours. I just feel those in government and responsible for spending the tax dollars are very inefficient and wasteful. I only wish those spending our hard earned money would be more like the FIRE community and question every dollar spent to ensure that the appropriate value is being extracted from the expenditure. Tom

  • Vicki@MakeSmarterDecisions October 23, 2017, 8:15 am

    Your tax bill on the one bedroom seems pretty crazy! I’d definitely contest that assessment. Our assessment just went up by almost $72,000 on our 8-unit rental – which is almost a 25% increase. But they never raised it when we bought it, so we had 5 years of taxes that were lower than they should have been. We were waiting for the letter every year… We are still debating selling it but the new management company is getting higher rents with each new tenant. Decisions…decisions… RealtyShares is looking pretty good right now too!

    • retirebyforty October 23, 2017, 8:43 am

      Wow, that’s a big increase. I hope the rent can cover the increase.
      Good luck with the apartment.

  • GYM October 23, 2017, 8:16 am

    Wow those are high property taxes! I am surprised about the 75% high school graduation rate that’s low :(. I hate the property tax bill as well, but on my 1BR condo it’s not very much, maybe Under $1000? My aunt has a huge lot and it’s about $18K a year and her property is assessed at $7 million. The property taxes are based on assessed value and square footage/ area and how new it is.

    Sounds like a good call to sell if you’re not able to find a tenant.

    • retirebyforty October 23, 2017, 8:45 am

      75% is ridiculous. I guess there are many low income families that skew the rate down. It’s sad because graduating from high school is so easy. If you attend, you’d most likely finish…
      Your property tax is really good.

  • retirengineering October 23, 2017, 8:20 am

    My property tax bill DOUBLED this year, from $1,200 to $2,500 (Florida). I was livid. I investigated and found the reason was that the previous owners lived in the house for ~30 years with just 3% tax increases. My first property tax bill last year was the one they would’ve paid. I got reassessed since I bought it last year, so since the house changed hands for the first time in 30 years, the taxable value about doubled too. Argh. Now time to up the rent on my roommates.

    • retirebyforty October 23, 2017, 11:29 am

      Yikes! I’d go ballistic if our property tax bill doubled. $2,500 still isn’t that bad. CoL in Florida seems to be much lower. No income tax is really nice too. I need to visit and investigate to see if we can retire there. Good luck with hiking the rent…

  • David D October 23, 2017, 8:31 am

    Yes! This has happened to us last year and this year, so we’ll be appealing in the first quarter of next year. Two double digit increases without any justification feels like we are being taken advantage of. We are in the north-east and this could save us thousands per year. Good luck to you!

  • Caroline@moneyscrap.com October 23, 2017, 9:53 am

    It sounds like no matter where you live, governments could learn a lot from the FIRE community. I haven’t had to deal with a 16% increase on any of my properties but the total amount of taxes I pay for the services provided seems totally unreasonable already. It’s like paying a second mortgage, except it will never end. If you have that much equity in your condo, selling may not be a bad option. Who needs the headaches from a rental?

    • retirebyforty October 23, 2017, 11:31 am

      Right, the bureaucracy is so inefficient. Each city counsel has their own agenda and they don’t necessarily align with homeowners’ interest.

  • David Michael October 23, 2017, 10:16 am

    Well …you could sell everything and rent an apartment where rents are going up 5-10% a year. No hassle…just pay rent. Personally, it’s fine to whine about the property tax increases, appeal them, and then go on with life. It’s great that you have a duplex or other rentals for you are in total control. With Crowdfunding…I don’t know. I do know that our former home in Los Altos, California went from $36,000 to 3.2 million over 40 years. Then a Google employee bought it, demolished it and put in a modern house that is worth 5.1 million. Yep! The urban areas of the USA have gone a bit nuts. Better to own rather than rent in the long run. Be happy! You could be living in a tent like an increasing number of Americans. Read an interesting story today of young families living in a tent city in Venice, CA. The put on their suits like everyone else, go to work, and return to their tent home because they can’t afford normal housing. The future does not look good for young people. Sad to watch as the homeless increase all over the country.

    • retirebyforty October 23, 2017, 11:35 am

      We’ll probably do that at some point. It’s a lot of work to be a homeowner. The problem with owning local rentals is that the price is too high here. Most investors can’t make positive cash flow unless they’ve the rentals for a long time. I like crowdfunding because I can invest in cheaper area and get the cash flow. You’re right about control, though.
      The Bay Area is crazy. Long time owners are sitting on a ton of equity. Homelessness is a huge problem today. It’s tough. You either drive or pay a ton to live close in.

  • Adam and Jane October 23, 2017, 10:36 am

    Over 17K for RE tax is a lot of money. It would take $500K at 3.5-4% tax free munis in order to generate enough money to pay for your RE tax. I would sell your rental and invest the money in true passive income with no overhead. 26years ago, our RE tax was $1200 and it is now over 6K for 1000 Sq ft house in NYC. I would NOT want to be paying 17K plus for property tax when I retire. RE taxes and healthcare will probably be your biggest expense at retirement.

    Adam

    • retirebyforty October 23, 2017, 11:36 am

      Exactly. I was planning to exit the rental in 4-5 years, but I’m going to step it up and make it happens sooner. Being a landlord doesn’t make sense with this kind of numbers.

  • Amy B October 23, 2017, 10:37 am

    The annual property tax bill doesn’t bother me at all.
    I don’t think twice of it and simply pay it from my checking account. We can easily afford it and don’t worry over expected annual increases.
    We live in a charming, safe, and clean town in middle Tennessee with excellent public schools with graduation rates of 95.5%. Jobs are plentiful and crime is very low. We have no visible homeless persons in our town with a total population of 75k. The area is green with mature trees, multiple public parks and golf courses, and loads of music venues.

    Our AV is $396,200 and the total property tax bill is $3,077. We have a 4 bedroom, 2.5 bath, 2 car rear entry garage, 3000 sq ft brick home with a third of an acre yard fully landscaped with mature trees and a long aggregate driveway. The neighborhood roads are wide and active with daily walkers, joggers, and cyclists and minimal outside traffic as we have only one entrance/exit. The homes are well maintained and the neighborhood is extremely quiet as we are protected from commercial business and interstate noise. We are within walking distance to the historical town square with shops, restaurants, coffee shops, ice cream parlors, and theatre.

    This is our primary residence and have no issues with our property tax. Our sales tax is 9.25%. We have no state income tax.

    We are satisfied with our quality of life.

    • retirebyforty October 23, 2017, 11:37 am

      Your tax is very reasonable. The AV on our duplex is $300,000 and we’re paying $7,200. The tax rate is high here. With your AV, it’d be almost $10,000 in tax…
      Your town sounds really nice. We might have to visit. 🙂

      • Pennypincher October 24, 2017, 3:42 pm

        I want to visit too! Sign me up!

  • Doug October 23, 2017, 10:42 am

    I think we pay a little south of 1,500 here in NM but that is with a military discount. No way would I want to live in a higher COL area. I better save up a little more money in case some people get the itch to start raising taxes a bunch

  • The Grounded Engineer October 23, 2017, 10:59 am

    That stinks your taxes went up so much. I moved out of the city and to the suburbs. The taxes are much lower and the taxes haven’t gone up much over the last five years in the area that I live.

  • jim October 23, 2017, 11:00 am

    The tax assessment is legally limited to 3% annually. So something else is going on with that large increase in the assessed value.
    The property tax goes up and down more in relation to bonds being passed or expiring. Thats democracy folks.

    • retirebyforty October 23, 2017, 11:39 am

      The AV increase is crazy this year. I’m going to call this week and see what they have to say. Then, I’ll send in the appeal.

  • Revanche @ A Gai Shan Life October 23, 2017, 11:18 am

    Ouch that’s even more than our property tax was! Best of luck with the appeal, I hope they agree to a much lower increase. We have our increases capped at 2% but how they calculate it is also pretty weird. I’ve estimated a minimum of $12,000 for annual property tax and am *hoping* it won’t be that high. (Not much chance of that I bet)

  • Felipe October 23, 2017, 12:08 pm

    I can’t figure out how to feel diversified without mutual funds, so I pay fund fees. Owning a rental property, I also pay property tax. In my state, I also pay income tax on the income, and the property is free and clear so I have no mortgage interest to charge against the income. I worked hard to have money and now realize it costs money to have money. I’ll take Colorado property taxes any day over Texas, where property taxes are really high in the big metro areas. At some point you may decide to sell and buy in an area with lower taxes, but then you’ll have cap gains taxes unless you do a tax free exchange. I’ve always heard it’s a pay me now pay me later world. Nice post. No answers of course for any of us, but nice to know others share in the pain. Good luck if you appeal.

  • Ja October 23, 2017, 12:41 pm

    Here in California we have proposition 13 to deal with. It restricts property tax increases until a sale or refinance to avoid driving retirees from their home.

    The problem is that you can also pass those low taxes to your children if they but the place from you. And that didn’t make sense.

    I pay over $6k a year in property tax but my neighbor bought his place (identical to mine) from his parents a few years ago and only pays $800.

    Not fair!

    • retirebyforty October 24, 2017, 1:22 pm

      It’s tough to figure out a fair system with property tax. Interesting about selling to kids. I didn’t know that.

  • Dash2Retire October 23, 2017, 1:07 pm

    When our long-term tenants left, we put our property up for sale and for rent at the same time. We decided we’d take whichever one happened first. Turns out, we got an offer to buy it within a few days, but not even one person had looked at the property for the rental. Made the decision pretty easy!

    • Financial Samurai October 23, 2017, 4:43 pm

      That’s funny, because I did exactly in thing last year and this year. Last year I was able to find tenants for my two bedroom two bathroom condominium. This year I was unable to find suitable tenant for my rental houseSo I sold it. Where did you sell your property? And do you have another one or are you now renting?

  • Joe October 23, 2017, 2:47 pm

    I live in Silicon Valley. We have outrageous property tax increases also. Our property tax basis is supposedly capped at a 2% increase per year, but it’s typically much more than that due to all the special assessments and bond issuance. I see special assessments and bonds for public schools, fire department, police department, roads, sewer, etc, i.e. all the services that should already be paid for by the base property tax.

    I own rentals at a lower cost area as well. The previous city officials defrauded the city by granting construction projects to their own shell companies. The property taxes in that city have gone up a lot in order to pay for very basic services that the city can no longer afford since it was defrauded out of tens of millions of dollars.

    I think a lot of the property tax money is going to government pensions, overtime, and new government buildings.

    • retirebyforty October 24, 2017, 1:24 pm

      That’s the problem with capping. The city doesn’t have enough money to pay for things voters want. Pension is a big problem for us too. The city should reform that for future workers.

  • Ken K October 23, 2017, 2:49 pm

    Yep I get the once a year rant going when I get the bill in the mail, my wife jokes it is my own personal holiday (lol). Thing that gnaws at me is if you overlay inflation rates and income growth rates you see local taxes are nickel and dime’g your disposable income as taxes are growing at a faster rate.

    This was one of the motivating factors why I am moving towards financial independence so I can increase my income faster than taxes grow:)

    • retirebyforty October 24, 2017, 1:25 pm

      Right. The property tax is increasing faster than inflation. It’s tough for us, but worse for fixed income seniors.

  • FullTimeFinance October 23, 2017, 4:15 pm

    The state of Delaware last assessed properties for property taxes since the early 90s. What that means is our effective rate of property tax tends to hover somewhere under half a percent. They have however been discussing a new round of assessments. I can only imagine my reaction if they ever do so. They’ll have to change some things as they do as the percent of the 90s valuation is actually quite large, the value is just unrealistically assessed.

  • Winkle October 23, 2017, 5:42 pm

    I guess the crazy property tax is the price you pay for no sales tax?

    Here in Texas, our property taxes are even more crazy. A few places approach 3% (mines 2.75). Meaning they have to pay the value of their home every 33 years to the tax man. Crazy. I’m all for the flat tax, but that’s a story for another day.

    • jim October 24, 2017, 10:56 am

      Property tax rates in OR are actually not that high. Average rate in OR is 1.09%. Thats #24th highest among the 50 states. These are not cheap properties.

      OR has a high income tax.

      • jim October 24, 2017, 11:00 am

        Also the per capita revenue in property taxes is #26 at around $1200 (as of 2010).

        I got these figures from Tax Foundation site.

      • ChrisB October 25, 2017, 8:00 am

        Here in Sacramento we pay approx 1.16% however it’s based on acquisition price which in our case we bought low then remodeled to add value, so the tax base remains “low” compared to actual market value.

        The thing I’ve learned having lived in TX, CO, AZ, and CA is that no matter where you go the tax man will get you. My place in Austin was a small historic 2BR near UT that had $7,000/yr taxes. The home was barely worth $300K. Our Sacramento home is over $1 million yet taxes aren’t much more than the Austin house.

        I think the more important metric is your overall tax bill, via property, state, sales, etc., versus what it costs to live in a particular place. My Phoenix home had super low taxes of around $2K annually despite being valued at $700K, however, we also had $500 water bills in the summer and $400+ electric bills to go along with it.

        Ultimately we could all complain about some aspect of being taxed no matter where we live, but I will agree that for some places such as IL and NJ it’s out of control and have no time seeing why there’s an exodus from such places.

        • retirebyforty October 25, 2017, 9:03 pm

          You’re right. The tax man will get you somehow. Oregon is pretty high, though. We have 10% state income tax and relatively expensive property tax. No sales tax and minimal auto registrations fees, though. Our water and electric bills are pretty cheap.

    • Financial Samurai October 24, 2017, 4:50 pm

      That is crazy, but at least you don’t have to pay state income tax! It’s 6% – 12% here in California!

      • ChrisB October 25, 2017, 8:02 am

        Incredibly relevant point about our CA state taxes. And if this tax “cut” makes its way then our ability to deduct the CA state taxes from the Federal return will be stripped. I hope it doesn’t pass!

  • Al October 23, 2017, 6:10 pm

    Next time you excersice your right as a citizen to vote, remember free healthcare, education, and the so called equality is just retheric for bigger Government and taxation of the middle class since the bottom 47% pays no tax.

    When they say, tax reform is for the rich, they actually mean YOU and the justification to expand Government.

    We were shock to see 3% and 4% property tax increases in the last two years.

    All this pale in comparison to what they do to people when they die or require long term care.

    Elderly people who need help have to pay as much as $5K a month for a room in these facilities as independent living with no services. If one needs nurse care or memory care forget it. You are looking at 15K to 20K a month.

    So if you get Alzheimer’s or dementia and happen to live a year or two, you are looking at over $500K in care alone.

    This is what awaits at the end of the rainbow.

    So next time you feel excited over 10% or 20% in property taxes, think about some poor elderly person that work and saved for 50 years and is now being rob in plain daylight by some beurocrat that has never had to earn.

    • jim October 24, 2017, 11:01 am

      The bottom 47% doesn’t have to pay property tax?

    • retirebyforty October 24, 2017, 1:27 pm

      I’m not looking forward to long term care…

  • Shels October 23, 2017, 8:53 pm

    I live in California and am so thankful for Prop 13 which the voters passed in 1978 and pray that it never goes away. My property taxes can not be assessed at more than what I paid for my home. The property value of my home keeps going up significantly, and thanks to Prop 13, my property taxes have not gone up at all since I purchased my home after 10 years ago. I am paying less than $4000 a year for property taxes on a 3 bedroom, 2 bath home in a good area.
    I feel for you, that is just ridiculous how much your property taxes are increasing. I know you don’t have sales tax in Oregon, but the property tax increase really bites.
    Love your blog, you are one of my top 3 FIRE blogs that I read diligently and really enjoy it!

  • Yet Another PF Blog October 24, 2017, 5:23 am

    Wow, that’s a lot of property taxes! After residential exemption, we’re only paying around 0.5% of AV out here in New England (decent but not outstanding schools, lots of local services). We’ll probably see a double digit increase soon since we voted to build a new expensive high school, but starting at such a low point to begin with and sending our kids there one day feels like it’ll be worth it.

    • retirebyforty October 24, 2017, 1:28 pm

      Oh wow, 0.5% of AV. That sounds very low. We’re paying about 2.5% of AV. It might be time to move soon…

  • Laura October 24, 2017, 7:12 am

    Ugh. I feel ya. Our bill is really high as well. Doesn’t help that when the cap occurred, was a “good” neighborhood, so assessed value was higher, thus we are in one of the neighborhoods where, if taxes were redone to be more fair, ours would actually go down. But that will likely never happen. Wondering when we’ll hit 5 digits for our taxes (next year? year after?). It’ll be soon.

    And also with you on what they have for RMV. They are really pushing that this year and would be surprised to get what they have down on ours.

    If I could get DH on board, would gladly move out of state to a lower COL area with better schools.

  • arlen October 24, 2017, 4:40 pm

    Try south Whidbey Island, Washington for low taxes and small-town life…a 20-minute ferry ride away to the Big City

  • Chadnudj October 25, 2017, 6:49 am

    Joe — one reason your rental’s value may have gone up by more than 3% is that the rental is not your primary residence.

    My rental property is in Florida. Tax increases are capped as part of a homestead exemption….but that only applies to primary residences, not rentals. So you should check to see if Portland’s law works the same way — it may be that you only have a 3% cap on your primary residence, and not on rental properties.

  • HP @ Full-time Dollars October 25, 2017, 9:48 am

    These high property taxes make me think twice about making a larger house purchase. I have a house now, but when I bought it 11 years ago it was very reasonable as a new build. The city I live in has grown immensely these past few years which have increased property taxes as a result. Though, like the above commenter, I have a homestead exemption on my residence, so that helps too. Anyway, I feel ya because I get the same way about property and car insurance increases!

  • Marco Demaio October 25, 2017, 1:12 pm

    6000$ for 1000 sqft??!?!
    It’s not even 100 square metres.
    Are they all crazy in US?!?!
    Your house propery tax is huge!
    In Italy we pay about 1800€ for a 100 square metres flat (in a condo) in main cities downtown (i.e. Milan, Bologna).

    Taxing the property house where the owner lives is really disgusting, it’s sheer comunism!
    They are basically expropriating a piece of your house year after year.
    I can’t believe US constitution allows such a disgusting practice. The house owned by someone who lives in the house should not be taxed. What happens if he does not have the money to pay the property tax?! Do they confiscate his house and throw him out on the street?!
    I can’t believe this! It’s insane!

    • retirebyforty October 26, 2017, 6:27 am

      Yeap. They get you one way or another. If the property tax is low, then income tax and other local taxes are high.
      How does the city pay for services in your town? Is your income tax high?

      • Marco Demaio October 27, 2017, 2:13 am

        Yes, income tax are huge in Italy. And sales tax too (22%).
        By including what we pay for social security, more than 62% of my small business income goes into taxes.
        Italy is definitely an example of a stifly taxation environment, that’s why I was so surprided to read in US you pay more taxes than me on property house. 🙂

        • retirebyforty October 27, 2017, 8:55 am

          They get you one way or another. Oregon does not have sales tax. We have a 10% income tax, though.
          Last year, we probably pay about 30% of our income to tax. I’ll have to double check. It might be a bit more.

  • Mr Crazy Kicks October 30, 2017, 5:18 am

    I feel your pain. Our property taxes go up every year. Last year we voted for a new waste water treatment plant, and this year the state is having budget issues. Not great for our tax situation. We’re at about $6k now, and our house is worth less than $300k.

    At least you guys are seeing some serious appreciation with your increases. I think out market just bottomed out last year. Oh well, can’t win them all. At least the stock market has been doing well for all of us 🙂

  • AJ October 31, 2017, 1:31 pm

    Hi Joe,

    Funny, that I just saw your post today. I have a rental property that I am thinking of selling because I’m tired of the management. But I don’t want to pay the capital gains or depreciation recapture taxes either. So, I called Realty Shares yesterday, and found out that they have 1031 exchange products that you can convert to. The caveat here, though, is that the property that you sell must be worth at least $500k. You can roll the proceeds from your sale in one of their properties or one of their funds. Unfortunately, this didn’t work for me, since my property is worth less than that, but I found out that Realty Mogul has a lower minimum, of just $100,000. I am seriously thinking of going with them. They don’t appear to have a lot of products right now, but you might find something with them. I’m also trying to find out if Fund Rise has anything like this, but I haven’t heard anything back from them yet. Will keep you posted!

    • retirebyforty October 31, 2017, 1:52 pm

      I’ve been looking at 1031crowdfunding.com. They specialize in 1031 exchange and they have quite a few projects up.
      The problem is that I can’t find much info about DST. Does this type of investment really work? It sounds good in theory, but we need to find the right sponsor. It just seems kind of risky because there aren’t much performance data out there.
      I’m thinking of just cashing out and pay the taxes.

      • AJ October 31, 2017, 1:59 pm

        Oh, wow. Have never heard of DST’s before. I went onto their website to find out what that is.
        The guy I spoke to at Realty Mogul said their products are mostly commercial products, like apartment complexes and strip malls. Oh, I just got an email back from Fund Rise (they don’t seem to have a phone number to call). They don’t offer 1031 compatible products, at the moment.

        • retirebyforty October 31, 2017, 4:40 pm

          From what I understand, all 1031 exchange has to go to DST or TIC.

  • Freedom40Plan November 7, 2017, 12:49 pm

    Man, those tax increases suck. I guess I should consider myself fortunate that ours have not gone up that significantly in the recent past. Of course, that’s not to say they won’t in the future. If this new tax plan goes through – this will hurt you even more as you won’t be able to deduct all of those property taxes on your federal return. Yuck!

Leave a Comment