When most people hear the words “tax reassessment,” they likely think it will mean a tax increase. However, this is not necessarily true. Let’s take a look at the process and impacts.
What is a property tax reassessment?
Every September 30, we—or our mortgage holder on our behalf—pay taxes on our property. The tax bill consists of payments to multiple entities, including the county, school district, city and others. To arrive at the amount of tax due for each, the county’s computer multiplies the assessed value of our property—land, improvements and other structures—by the tax millage rate (set annually by each county’s council) to yield a total tax due. To figure out what’s owed, a property owner can multiply the current assessed value by the total tax millage rate.
Countywide reassessments are massive undertakings that involve valuing thousands of individual properties. This process is further complicated by the fact that Delaware’s three counties have not reassessed all properties in over 40 years.
Tyler Technologies will conduct the reassessments in each county after winning a request for proposal (RFP) process. The underlying purpose of regular reassessments is to develop a fair system for updating property values so each is valued as close to 100% of its market or actual worth as possible. This way, property owners each pay their fair share and equity exists in the property taxation system.
Why are all three Delaware counties being reassessed?
Each Delaware county is party to a Chancery Court settlement agreement requiring them to complete a reassessment of all their properties effective for the 2025 tax year. The Chancery Court litigation resulted from a major gap between assessed values and current market values (and the inequities that it created since it has been 40-plus years since the previous reassessments in each county).
For example, these inequities create problems when two homes in the same neighborhood are unequally assessed due to new construction, additions and alterations, which might not have been captured on the tax rolls. The court-mandated reassessments in each county should create a more equitable distribution of tax revenues based on current values, which will be updated regularly in the future.
Assessed values will likely be higher—will my taxes automatically increased?
It should come as no surprise that new assessed values will be quite different from the current assessments, which are more than four decades old. However, even though property values upon reassessment will be higher, this does not mean everyone’s taxes will automatically go up, although this is not easy to explain.
Property tax reassessments are supposed to be a “revenue neutral” process where the total amount of assessed values (total ratable base) for all the properties in a county is divided by the total county budget to arrive at a millage or tax rate. State law also limits the amount a county can increase its total budget during a reassessment. In most cases, after a reassessment, some property owners’ taxes go up, some go down and others stay around the same level.
What should I do when I receive my reassessment notice?
- Don’t automatically assume your taxes will increase when you receive a reassessment notice that reflects a higher value than your current assessment. Each county council must still establish the new tax millage rate, which won’t happen immediately.
- Review your reassessment notice to determine if you think the new assessed value is reflective of what your property is worth today.
- If you believe that your property is over-assessed, the first step is an informal hearing with Tyler Technologies to see if you can offer evidence to them about why your property reassessment is not credible. Seek guidance from a property tax consultant, appraiser and real estate counsel to discuss the appeal process.
- Please keep in mind that valuations are not always right, so providing Tyler Technologies with more information might help resolve any discrepancy without further action.
- If the informal process is not satisfactory, a more complex legal appeal can be filed. You can visit your county website for information on this option.
If your new assessment reflects what you believe to be your property’s correct market value, the big challenge will be to wait and see what the county council approves as the new millage rate. At this point, you will be able to calculate your new taxes.
If your new taxes are close to your current ones, and your assessed value is fair or credible, then the reassessment process has worked as intended. If not, there are steps you can take to appeal and correct any inaccuracies in your property’s value before the tax bill becomes due.
Related: 6 Reasons Why Businesses and Individuals Should Move to Delaware
