Thursday, September 6, 2012

Week In Review

State Capitol Week in Review
        LITTLE ROCK –  Almost all Arkansas counties now reappraise property values every five years.  However, if the market value of real property in a county increases by 25 percent during that five-year period, future reappraisals would be done every three years.
        Counties with rapid growth in market values will have property reappraisals every three years and counties with slower growth reappraise every five years.  Generally speaking, growth of more than 5 percent a year is considered rapid growth.
        If a county that is on a three-year cycle has growth of more than 15 percent, it stays on a three year cycle.  On the other hand, if growth during the three-year cycle is less than 15 percent the county then would go to a five-year cycle.
        If a county on a five-year cycle has growth in property values of more than 25 percent during the cycle, it goes to a three-year cycle of reappraisals.  If growth during a five-year cycle is less than 25 percent, the county stays on a five-year cycle.
        If a county is placed on a three-year cycle because of increased market values due to a single property improvement, the county may appeal to the state agency in charge of administering property tax laws, the Assessment Coordination Division.
        Amendment 79 to the state Constitution, which Arkansas voters approved in 2000, authorizes the legislature to establish the frequency of reassessments of real property. 
        The amendment requires at least one county wide reassessment every five years.  Act 1058 of 2001, which had broad bipartisan support, determines the frequency of reappraisals and enacts many of the provisions of Amendment 79. 
        Property taxes are a major source of revenue for school districts, libraries, cities and counties.  School elections are Tuesday, September 18, and school districts in approximately 50 counties will have some form of millage elections.
        The assessed value of property is determined by multiplying its true market value by the assessment rate of 20 percent.  The assessed value is multiplied by the millage rate, and the resulting dollar amount is what the property owner must pay in real property taxes.
         If they believe their assessments are too high, property owners may appeal to the county's Board of Equalization.
        Amendment 79 grants tax relief to certain property owners.  Increases in assessed value are limited to 5 percent on parcels that are the property owner's main residence.  Any increase in assessed value on parcels that are not a principle residence is limited to 10 percent a year.
        Also, Amendment 79 freezes assessments for senior citizens and people with disabilities.  If assessed values go down, their taxes would also go down, but the amendment prevents their property taxes on their main residence from going up. 
        When people 65 or older sell their homestead, the cap on assessed value is lifted for the new property owners if they are younger than 65 and do not have a disability.
        Amendment 79 established a homestead property tax credit that used to be $300 but was raised to $350 by the legislature when it approved Act 142 of 2007.  The act is saving Arkansas property owners about $22.5 million a year in lower property taxes.
        The homestead tax credit can be worth up to $350 but it may not exceed the total amount of ad valorem property taxes owed by the property owner.

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