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Let's take another look at property taxes, this time from a different angle. There was a statistical note in the RJ on Sunday 5/12/13 in the Nevada section that said Valley home prices had surged 30 percent between April 2012 and April 2013. That’s a serious jump and it got me thinking about the not widely known recapture provision that exists in the property tax cap law passed in 2005.
The cap has certainly done its job protecting us against the insane real estate bubble as well as the subsequent implosion and is probably one of the best laws to ever come out of the Nevada Legislature.
So, what is the recapture provision, how does it work and should we be concerned? The first thing to know is the only reason it exists in the law is to make an allowance for the boom and bust nature of Nevada’s mining industry. No one, literally no one, ever dreamed it would ever apply anywhere except in those couple of counties up north so dependent on mining. And yet...
How does it work? Without giving you a headache here it is at its core: The property value must fall by 15% or more and then turn around and rise by 15% or more in back-to-back years. In other words a violent drop followed by a violent rise in a very short, compact time frame.
Should we be concerned? Probably not. While the violent “ups” may be coming, the violent “downs” are more than three years behind us. The losses have been moderating so even if the values surge back by 15%+ the smaller declines mean the recapture provision likely won’t kick in. Right now only about 1.5% of the homes in the valley are subject to the recapture. We’ll revisit this at the end of the year when the Assessor sends out the “Notice of Value” cards.
Before we close the books on property taxes I want to take this opportunity to thank NSC Member Mark Schofield, our former, now retired Assessor, for the key role he played in getting the property tax caps on the books. Many people deserve recognition and credit for the caps but without Mark, who brought the information public at an NSC meeting in 2005, none of it would have happened. Because of Mark we avoided the double and even triple tax increases of the boom and, just as important we are protected against the “up from the bottom” double digit increases that may very well be coming in the next few years.