The Maine Constitution says that property shall be assessed at its “just value.” The courts have interpreted “just value” to mean fair market value or in other words “what the property is worth.” A property’s worth is commonly looked at as “what a willing buyer would pay a willing seller” for a particular piece of property.
The process assessors use to value many properties at the same time using consistent, standardized methods is called mass appraisal. Properties are grouped and analyzed based on characteristics that affect value, such as location, size, age, condition, and property type, using recent market sales to identify value trends. Those trends are then applied consistently across similar properties to estimate their fair market value as of April 1. Unlike a private appraisal, mass appraisal focuses on fairness and uniformity across the entire community, rather than an in-depth analysis of one individual property.
Determining the market value of property is no easy task. Local assessors use three basic methods to determine a property’s worth. To find the value of any piece of property the assessor must first know what properties similar to it are selling for (Sales Comparison Approach), what it would cost today to replace it (Cost Approach), and how much it takes to operate and keep it in repair, what rent it may earn, and other income and expenses affecting its value (Income Approach). One, two or all three of these methods might be used to help the assessor determine the fair market value of a property.
Land and buildings (sometimes referred to as ‘improvements’) are valued separately. Land with water frontage, water views, or some other feature that makes it more attractive to a buyer, will likely be assessed at a higher value than a lot of the same size without that feature. Therefore, a home on land with water frontage may be assessed at a significantly higher value than an identical home next door without water frontage.
To implement the constitutional requirement that real estate be assessed at its “just value,” and in recognition of the tremendous difficulty and costs to a municipality to maintain a “just value” assessment, the Maine Legislature enacted assessing standards that municipalities must meet. One standard is that the total local valuation of taxable property can not be less than 70% of fair market value. Another standard is that the difference in valuation between similar properties should never be greater than 20%. Also, in order for the town to offer taxpayers the maximum value of the homestead, veteran, or other exemption, the total local valuation of taxable property must be at 100% of fair market value.
Revaluations are commonly used when a community falls below the assessing standards. During a revaluation, all property is reviewed in the municipality with an adequate sample being inspected, and all assessments being adjusted to fair market value.
Homestead and Veterans Exemptions, by state statute, are adjusted each year by the local certified ratio. Therefore, if the certified ratio is 100%, meaning all local property is assessed at 100% of just value, the allowable Veteran’s exemption is 6,000 (6000 x 100%) and the Homestead exemption is $25,000 (25,000 x 100%).
On the right side of your tax bill look for the “current billing information box”. The total of all qualified exemptions that reduce your assessed value will be displayed on the line for TOTAL EXEMPTIONS.
Property taxes are levied according to a mil rate. The mil rate is the dollars/cents per $1,000 of value that you will pay in property taxes. For example, if you own a home valued at $100,000 and the tax rate is 20 mils, then your tax bill will be $2,000 (or $20 x 100).
In calculating a property tax rate, the Old Orchard Beach Town Council determines the amount of revenue needed to be raised by the property tax to fund all of our municipal services. That amount is then divided by the total local assessed valuation to get the local tax rate. For example, a town that has a local assessed valuation of $100 million and needs to raise $2 million in property taxes will require a tax rate of 20 mils to do so ($2,000,000 divided by $100,000,000 equals .020).
Another way to look at the mil rate is as a percentage of value. For example, if your home is valued at $100,000 and the mil rate is 20, then your property taxes are equal to 2% of your home’s value; if the mil rate is 15, then it is 1.5% of the home’s value; 10 mills is 1%.
The assessor calculates how much must be raised in property taxes based on what the Town Council has approved. A tax commitment listing all the property in town, its value and the taxes that are owed is then signed by the municipal officers and given to the tax collector who sends out the tax bills. In Old Orchard Beach, property taxes are paid in two installments due in September and March. Property taxes may also be escrowed and payments made as part of a homeowner’s monthly mortgage payment.
Property taxes provide a stable source of local funding for the services and infrastructure that make a community function—schools, roads, public safety, fire and emergency services, parks, libraries, public works, and municipal government.
Unlike a fee, property tax is not based on how much of a particular service you personally use. Instead, the community determines how much money must be raised, and property assessments provide a way to divide that cost among property owners based on the relative value of the property they own.
Put simply: the budget determines how much the community needs to raise; property assessments determine each property owner’s share.
Assessors are generally responsible for valuing and assessing two types of taxable property: real property and personal property.
Real Property is land and the buildings or other permanent improvements attached to it. This includes homes, commercial buildings, apartment buildings, vacant land, and other structures or improvements that are considered part of the real estate. The property tax bill for most Maine homeowners is based on the value of real estate: the land, the house, and the outbuildings.
Personal Property is taxable property that is not real estate. For assessing purposes, this commonly includes business machinery, equipment, furniture, fixtures, and certain other assets. It can also include taxable property such as some mobile homes, campers, trailers, or park models, depending on how the property is classified under Maine law.
Some tax bills contain a mix of both, such as a park model home (personal property) with a deck, sunroom, or shed that is attached or fixed on the site (real property).
Certain motor homes, vehicles, and boats are exempted from personal property tax if they are subject to another form of taxation, such as the excise tax.
Local assessors are required by law to “ascertain as nearly as may be the nature, amount and value as of the first day of April of the real estate and personal property subject to be taxed…” This means that if on the 1st day of April you own property in Old Orchard Beach that is subject to taxation, you are responsible for paying taxes that support the municipality.
Your tax bill is determined by multiplying your assessed value times the tax rate. Each year, the Assessing Office reviews changes in the market and adjusts assessed values accordingly. After the Town Council approves the town budget, the tax assessor determines a mil rate by dividing the amount of revenue that must be collected by the total value of all taxable property in the town. Finally, individual tax bills are computed by multiplying the net assessed value (after exemptions) by the mil rate. Since the mil rate is expressed as a dollar amount per $1000 of assessed value, the computation looks like this…
$500,000 (assessed property value) x $11.50 (mil rate) /$1,000 = $5,750
Maine communities provide a vast array of services, including police and fire protection, winter and summer road maintenance, code enforcement, planning, economic and community development, issuance of licenses, recreation, parking, solid waste collection and disposal, sewer infrastructure, emergency medical services, health and human services, and sometimes more depending on where you live.
Assessed values are adjusted as the real estate market changes or when something about a property changes.
Sales throughout the community help assessors identify market changes.
Permits or licenses involving renovations, additions, new construction, demolition, or changes in property use also affect an individual property’s assessment.
Property owners and Businesses should notify the Assessing Office of any changes that impact their property value.
Assessors must review these changes annually to help ensure that property values remain fair and equitable in relation to one another.
Pursuant to state statute tax appeals must be filed in writing with the Tax Assessor within 185 days of the commitment of the taxes. Tax appeals must be based upon a claim of over valuation of the property not upon the amount of the tax bill. A taxpayer may only appeal the current assessed value stated on the tax bill. The Application for Abatement of Property Taxes is here.
The tax rate, which is set once a year by the Town Council, cannot be appealed. Your valuation, which is set by the Assessor, can be appealed by following the appeal procedure.
To submit an address change or correction you will need to present to the Assessing Office a signed, written statement of the changes. E-mail updates are also accepted. Email Assessing@oobmaine.com