I’m admittedly behind on this, but I’m certain many of you are not. By now you’ve probably read that Montgomery County supervisors are considering an increase of $.21 in the real estate tax rate.
First things first … it’s not going to happen.
Real estate taxes in Montgomery County are used, as they are in many counties across the country, to fund local government departments and initiatives, some medical services, and local education. I’m sure there’s an exhaustive list somewhere, but that’s a general idea. To be fair, Montgomery County enjoys a real estate tax rate that’s, admittedly, a bit on the low side. The current tax in the county is $.75 per $100 of value, so for a home that’s not located in Blacksburg or Christiansburg and valued at $200000, the property tax would be around $1500 per year, or $125 per month. Put that same home in Christiansburg, where the property tax is $.1126 per $100 of value, and the property tax jumps to $1725 per year. In Blacksburg ($.22 per $100 of value) it climbs to $1940 per year.
|Area||Tax Bill at Current Rate||Tax Bill at Proposed Rate|
|Montgomery County||$1500 annually||$1920 annually|
|Christiansburg||$1725 annually||$2145 annually|
|Blacksburg||$1940 annually||$2360 annually|
Say what you want about elected officials, but they know how to get our attention. And I doubt any of them are going to authorize a property tax increase of $.21 – the impact within a community would have profound and long-lasting impact. Consider:
- Rents rise. As an investor, if the taxes on my properties rises, I would be inclined to raise my rents to cover the additional costs. Unless incomes rise proportionately, an imbalance between taxes and income exists.
- Demand decreases. If property taxes are too high in a particular area, buyer demand decreases. If buyer demand decreases, so do property values. And decreased property values lead to a host of
- Mom and Pop retire. The short-term effect on locally-owned businesses means an even greater financial burden for – to use a favorite political term – Main Street. And when those businesses close up, it creates an even greater void in the tax base (and it can’t be argued that national chains will move into that space – First & Main has disproven that).
We need additional tax revenue from the property tax, sure; we’ve got one high school with a collapsed gym, and aging facilities at other schools – it’s hard to argue that point. But it’s highly unlikely we’ll see a tax hike such as the one proposed. As quoted in the article (bolding mine):
Supervisor Gary Creed said he wanted to see a proposal that held department and agency budgets flat except for a 10-cent real estate tax rate increase to cover school construction debt — an increase already higher than any in memory. But he suggested going ahead and advertising a 21-cent increase. “Maybe we could get some attention,” he said.