Sticker Shock: The Truth about Tax Revaluation
By Matt Brazier

Tax values set to soar,” blares a recent headline in The Wilmington Star-News. “They’re gonna run us off the beach,” your neighbor says for the twentieth time. These statements are common to the tax revaluation hysteria that is sweeping the area. New Hanover County residents, particularly those of us who are lucky enough to live by the water, have happily watched our homes jump in value for the last couple of years. At the same time, however, we have nervously anticipated 2007, the year new property tax values are finalized and released, and we start paying taxes based on these higher figures.

Although your neighbors may be convinced that the New Hanover County Tax Office is ready to run us off the beach, before you set up a lemonade stand outside you home in order to pay its taxes, check out the facts we’ve gathered. The tax revaluation won’t result in everyone paying more taxes; it will result in some people paying more, other people paying less, and some people paying the same amount they always have. It’s important to understand that almost everyone’s property values are going to go up. The local governments will react by adjusting the property tax rate down, in order to collect roughly the same amount of money. You’ll only face a bigger bill if your property value went up more than the average.

This fall, you will receive your first round of new figures: the re-evaluated tax value of your home. Around the same time, each town government will receive an estimate of the new valuation of their tax base. This is an estimate of the total value of all the homes and personal property in the town. In the spring, the towns will be given an actual figure and a new tax rate will be established as new budgets are being prepared. New Hanover County’s tax base is expected to increase by about 50%. The tax base for the beach towns could double or even triple.

Just because your house doubles in value doesn’t mean that your tax bill will double also. By law, the local budget officers will be required to publish a revenue-neutral tax rate. This is the new tax rate that would result in the same revenue for the town. There will be pressure on the politicians to adjust tax rates in such a way that their revenues don’t increase dramatically. So, if the tax base in Kure Beach doubled, then the tax rate could theoretically be cut in half. If your Kure Beach home doubled in value, you’d pay no additional property taxes to the town. You would, however, pay a larger share of New Hanover County property taxes.

For example, Kure Beach has a 29.5 cent tax rate and New Hanover County has a 68.5 cent tax rate. This means that for every $100 of tax value, you pay 29.5 cents to Kure Beach and 68.5 cents to the county. A house with a value of $100,000 results in a tax bill of $295 to Kure Beach and $685 to the county.

If Kure Beach’s tax base tripled, the tax rate could (theoretically) change to 9.8 cents (trust us on the math). If the county tax base increases by 50%, its tax rate could change to roughly 46 cents (again, trust us on the math). Now suppose that the same house has a new tax value of $300,000. The Kure Beach tax bill would stay the same, but the county tax bill would increase to $1,380.
 

Now imagine an oceanfront lot in Kure Beach that had a tax value of $150,000. The bill was $442 to Kure Beach and $1,028 to the county. If the new tax value of the lot is $650,000 than the new tax bill will be $637 to Kure Beach and $2,990 to the county.
We decided to sample a few homeowners and see how their tax bills would be affected. A few assumptions had to be made. The professionals in New Hanover County’s tax office seem confident that the county tax base will increase by about 50%, so that’s what we used. We estimate that the tax base in the beach towns will increase by 100 to 200%. To determine the new tax value of individual properties, we looked at recent sales for a comparison. As you can see, not everyone will feel the pain.
 

The bottom line came to this; if you live at the beach or on the water, you’ll pay more taxes. With everyone scrambling in recent years to own property near the coast, these homes have quickly leapt in value. The town taxes might not get you, since as your property value leapt your neighbors bounded along right beside it. However you’ll be paying a greater share of county taxes.

You might not get run off the beach after all.
 

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