My Land is Worth What!? 2020 Wake County Real Property Tax Reappraisals and Homeowner Rights

by John D. Burns and Jason C. Pfister

In January 2020, the Wake County Department of Revenue published the latest reappraisal of the tax value of every parcel of land in the County. It is expected that a majority of the County’s parcels will reflect significantly higher tax values compared to the last appraisal in 2016. These values can be appealed, but certain processes and crucial dates apply.

What is a reappraisal?

The tax value of a parcel is determined by the County Tax Assessor, based on a countywide assessment of every parcel in the county. Periodically, those tax values are reassessed, to bring them closer to the actual market value of the property. Wake County’s most recent reassessment was just concluded and announced on January 1, 2020.

Property tax rates in Wake County are set by the County Commissioners and the City Councils of each of the 12 different municipalities in the county. If your property is located in Wake County, the Commissioners set your county rate to pay for county services. If your property is within the boundaries of, say, Raleigh, the Raleigh City Council sets an additional tax to pay for city services. Added together, these two rates constitute your total property tax rate. Some areas, such as rural fire districts, have an additional small assessment. But for most taxpayers, the city and county tax rates determine their property tax liability.

Every property owner in a jurisdiction pays the same rate in property tax, multiplied by the value of their property.

Wake County’s rate is currently .7207. Raleigh’s is .4382, meaning that a property owner in Raleigh will pay a tax rate of $1.1589 per hundred dollars of property valuation. By way of example, that tax rate results in a total property tax for 2019 of $3,476.70 for a property with a $300,000 tax value. A reappraisal is the process that ensures that the taxed value is close to fair market value so rates can be accurately set.

I thought this only happened every eight years, what’s going on?

Property tax reappraisals are required by law to occur at least every eight years in North Carolina.

Faced with rapidly-changing property values, the Wake County Board of Commissioners voted in 2015 to move to a four-year schedule. This more frequent schedule intends to keep tax values more closely aligned with actual market values and provide more accurate forecasting for county and city budgeting, while also aiming to prevent an eight-year “sticker shock” for taxpayers.

What happened in Wake County this time?

According to the Tax Assessor’s office, “on average, homes in Wake County increased 20% in value from four years ago, and commercial properties increased 33%.”  

However, homes below $250,000, because of high market demand, saw a 31% increase. Properties in certain areas of the county, like Knightdale, Zebulon, and some rapidly-changing areas of Raleigh and Garner, saw even larger gains.

My taxes are going up 31%!? That’s outrageous!

For most taxpayers, the actual tax bills will not increase at the same rate as the tax value. This is because the county is required to publish a “revenue neutral” tax rate.  

For instance, if last year’s property tax rate on the former valuation brought in $1 billion of tax revenue, the county is required to tell taxpayers what rate would bring in $1 billion if based on the new revaluation. Where values have risen in a county, that rate should be lower than the previous rate. The purpose of this revenue neutral rate requirement is to help taxpayers understand the effect of the revaluation and whether the county and city are increasing or decreasing their budgets.

This year, Wake County has determined the revenue neutral rate to be .6000. The revenue neutral rate in Raleigh is .3585, for a total rate of $.9585 per 100 dollars of valuation for a Raleigh property owner. Under this revenue neutral rate, our hypothetical $300,000 home, if it increased by 20% in value, would have a tax value of $360,000 and a tax payment of $3,450.60, or $26.10 less than the year before, despite the 20% increase in taxable value.

However, many property owners – particularly commercial property or residential property in fast growing areas of the county – may find that their property’s tax value has increased substantially more than this average percentage. With final rates not set until the budget process in June, the new value of a piece of property is obviously crucially important information for a taxpayer, and it is equally important that the value be accurate, or the next four years of taxes will be based on an improper calculation.

My value is still too high – can I appeal?

Yes! Any taxpayer who “owns or controls” taxable property in Wake County may appeal the listing or appraisal of that property. Thus, family members, guardians, trustees, and in some instances tenants, may commence the review. In some circumstances, the taxpayer may even appeal the valuation of another piece of property if the taxpayer can show that improper valuation of that property has harmed them.  

There are two ways to appeal. The first is the informal review process. This method is most easily available at the County Tax Assessor’s “Tax Portal” website.

If a taxpayer believes that the value as of January 1, 2020 was not correctly assessed – for instance, if there is incorrect information about the property on the tax reappraisal, hidden damage to the property, or the market value was otherwise incorrectly determined – this is the place to start. This process can be started online through the Tax Portal or with the written form, which should have been received with the valuation notice. Wake County requests such informal review requests be submitted within 30 days of receipt of the valuation notice.

Through the informal review, a taxpayer may provide additional information to the Tax Assessor’s staff, such as corrected information about the property or recent comparable sales that were not taken into account. The Wake County Tax Assessor staff will reconsider the valuation on a more specific level and either confirm or adjust that valuation based on any additional information provided.

If a taxpayer is not satisfied with the result of the informal review process, the taxpayer may file a formal appeal to the Wake County Board of Equalization and Review (BOE). The BOE is a group of experts appointed by the County Commissioners which hears and considers all property tax appeals. This process may also be commenced at the Tax Portal website or addressed to the BOE in writing.

All such appeals must be filed on or before May 28, 2020, the day the BOE adjourns.

The only exception to this timing requirement is if the taxpayer was not notified of the value change until after this adjournment date, in which case the absolute final deadline would be December 31, 2020. In a non-revaluation year, if the county reassesses and changes the value of an individual piece of property from the prior year or in certain other uncommon circumstances, the taxpayer will also have appeal rights.  

Every appeal filed with the BOE will receive a hearing. These hearings are public meetings and are conducted in person before the BOE. At the hearing, the BOE will hear evidence from the taxpayer as well as the County Tax Assessor. Because the county’s values are presumed to be correct unless proven otherwise, an appealing taxpayer should be prepared to present evidence that a lower valuation is appropriate. This can involve the presentation of nearby comparable sales, the testimony of expert valuators, or similar evidence. Business entities appealing their tax valuations may only use non-attorney representatives in certain limited circumstances.

After the hearing, the BOE will produce a written decision on the appeal within 30 days and may confirm, increase, or decrease the value of the property appealed by the taxpayer.

What if I’m still not satisfied?

If dissatisfied with the result of the BOE decision, the taxpayer may then appeal to the North Carolina Property Tax Commission within 30 days after receiving the BOE decision by filing a Notice of Appeal and Application for Hearing with that body.

The Property Tax Commission conducts its hearings as a court of law, and will apply the North Carolina Rules of Evidence. Appealing taxpayers should be prepared to prove their contentions of lower value or procedural irregularities by valid, admissible evidence and testimony which must be submitted to the Tax Commission according to its rules and procedures. 

Decisions of the Property Tax Commission may then be appealed to the North Carolina Court of Appeals, but any determination will be based on the record established before the Commission, which must be established correctly at each stage to protect the taxpayer’s rights. Arguments can be inadvertently waived if not made properly. If you have questions about your valuation or think your property has been improperly valued, the attorneys at Forrest Firm’s Raleigh Office can help you understand and protect your rights.

John D. Burns is a former Wake County Commissioner and a litigation attorney at Forrest Firm with extensive appellate experience.

Jason C. Pfister is a litigation and commercial real estate attorney with significant experience advising clients in valuation challenges.