What is revaluation and how am I affected?

In 2019, the City began the process of updating all residential and commercial real estate property values citywide. This is known as a revaluation. The Maine Constitution requires that properties be assessed at their "just value." Courts have interpreted just value to mean in accordance with fair market value, or in other words: what the property is worth. In South Portland, as in many communities, determining the just value is the job of the Assessor.

Maine law provides for two primary assessing standards that all Maine municipalities must meet. The first of these is that the average sales ratio in a municipality must not fall below 70%. (This statistic is calculated by averaging the ratio of the current assessed value divided by its selling price all sales in a municipality.)  The second standard states that all properties must be assessed equivalently.  Two properties that are similar, in similar locations must have equivalent values.

For example, if you and your neighbor have essentially the same home and land features, and your property is valued at $200,000, then your neighbor’s value should also be similar to the $200,000 valuation.

In recent years, significant changes have occurred in the real estate market in South Portland (and the region). In fact, this past January, Redfin named South Portland one of the ten most competitive cities in the entire United States to buy a home, finding that 55.6% of homes sold above list price. The sale prices impact not just the homes that were sold, but all similar properties in our community as well. As a result of these real estate market forces, South Portland’s ratio has fallen below our State’s standard.

While commercial property sales have also been competitive, they have been outpaced by the residential market. Because of this, when the revaluation occurs, there will be a property tax “shift” that takes place. In other words, property value growth on the residential side will outpace growth on the commercial side and as a result, residential property owners will bear more of the property tax burden. Once this revaluation is finalized later this spring, it will not be uncommon for residential property owners to see tax bill increases of 10%, 20%, 30% or more even if the City budget were to remain flat.

Here is a simplified explanation as to why this is so. Imagine a community has $100 million in total value evenly split between commercial ($50 million) and residential ($50 million). This community needs to raise $1.9 million via property taxes to fund its municipal budget. This would yield a tax rate (aka mil rate) of $19.00 per thousand dollars of assessed value. For someone with a $200,000 home or business, this means an annual tax bill of $3,800 ($19 x 200).

However, if a revaluation found that all property values needed to increase evenly by 25%, the community’s value would now stand at $125 million. In order to raise the same $1.9 million in revenue for the municipal budget, the tax rate would actually decrease by 20% to $15.20. The owner of the $200,000 home now has a home worth more - $250,000 – but because the tax rate is now only $15.20, they pay the exact same amount in property taxes as before: $3,800 ($15.20 x 250).

Unfortunately, revaluations are never this simple. Some areas and sectors see increases faster than others, while some actually can see reductions in value. In the same example as above, assume the commercial side value only increases 15% while residential increases 35%. This still yields a 25% overall increase as before (to $125 million in overall value), and the mil rate would still drop from $19 to $15.20 to raise the same $1.9 million in revenue. However, the $200,000 homeowner will see their property increase 35% to $270,000. At the new tax rate, their tax bill will increase $304/year, an 8% jump. (Remember that had it been an across the board 25% increase, their tax bill would have remained the same.) Conversely, a commercial property owner with a $200,000 property would see their property’s value rise by 15%, to $230,000. At the new mil rate, the owners would go from paying $3,800/year in taxes to $3,496 – an 8% decrease. The amount that the commercial properties saw for a decrease is thus made up by the residential side. Though the percentages will be different, this is in effect what we anticipate for South Portland properties.

What can I do to prepare?

As we noted in a tax bill letter mailed in 2020, and in a letter from the City Manager mailed to all residents in March 2021, part of the information used to determine valuation is based on the information contained within our Assessor’s database. For those of you who haven’t already, please visit http://gis.vgsi.com/southportlandme/ and choose “Enter Online Database”. From there you can enter your property address to ensure the information we have on file is correct.

How will I know what the new value will be? When will I get my first tax bill? 

New values will be posted on the Assessor’s page here http://gis.vgsi.com/southportlandme/ in May or June and the first tax bill reflecting these new values will be sent in July 2021.   The first installment is due September 2, 2021.   You can look-up and pay taxes online here.

What if I think my property has been assessed incorrectly? 

If you have questions or changes to report, contact Assessor Jim Thomas at jthomas@southportland.org or 207-767-7604.

 

Make sure you're taking advantage of all the programs and assistance available to you:

 

There are a number of State and City property tax assistance programs available to qualifying residents. Below, please find a listing of each program, with a link to an application and/or more information.

 

  1. Homestead Exemption. This program provides a measure of property tax relief for certain individuals that have owned a homestead property in Maine for at least 12 months and make the property they occupy on April 1 their permanent residence. Qualifying property owners receive an exemption of $25,000.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/property-tax-exemptions.
  2. Veterans Exemption. A veteran who served during a recognized war period and is 62 years or older; or, is receiving 100% disability as a Veteran; or, became 100% disabled while serving, is eligible for a $6,000 exemption.
    FMI: http://wwwmaine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/property-tax-exemptions.
  3. Paraplegic Veteran Exemption. A veteran who received a federal grant for a specially adapted housing unit may receive a $50,000 exemption.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/property-tax-exemptions.
  4. Blind Exemption. An individual who is determined to be legally blind may receive a $4,000 exemption.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/property-tax-exemptions.
  5. Renewable Energy Investment Exemption. This program exempts renewable energy equipment, such as solar panels, from property tax (as of April 1, 2020). Taxpayers must apply for the credit by April 1 of the first year the exemption is requested.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/property-tax-exemptions.
  6. Property Tax Fairness Credit. Eligible Maine taxpayers may receive a portion of the property tax or rent paid during the tax year on the Maine individual income tax return whether they owe Maine income tax or not. If the credit exceeds the amount of their individual income tax due for the tax year, the excess amount of credit will be refunded to them.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/income-tax-credits/property-tax-fairness-credit.
  7. Tree Growth. This program provides a benefit for owners of at least ten acres of forested land used for commercial harvesting. A forest management and harvest plan must be prepared and a sworn statement to that effect submitted with the application. Applications must include a map of the parcel indicating the forest type breakdown as well as all other areas to be excluded from the tree growth program. Properties are valued at their current use, rather than at market value.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/land-use-programs.
  8. Farmland. In the Farmland program, the property owner is required to have at least five contiguous acres in their parcel of land. The land must be used for farming, agriculture or horticulture and can include woodland and wasteland. Additionally, the parcel must contribute at least $2,000 gross income from farming activities each year. Properties are valued at their current use, rather than at market value.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/land-use-programs.
  9. Open Space. The parcel must be preserved or restricted in use to provide a public benefit. Benefits recognized include public recreation, scenic resources, game management, and wildlife habitat. The municipal assessor is responsible for determining the value placed on open space land. In the determination of that value, the assessor must consider the sale price that a particular open space parcel would command in the open market if it were to remain in the particular category or categories of open space land for which it qualifies.
    FMI: http://www2.maine.gov/revenue/taxes/tax-relief-credits-programs/property-tax-relief-programs/land-use-programs.
  10. Hardship Abatements. By law, “[t]he municipal officers…may, on their own knowledge or on written application, make such abatements as they believe reasonable on the real and personal taxes on the primary residence of any person who, by reason of hardship or poverty, is in their judgment unable to contribute to the public charges.”
    FMI: State Statute
  11. Senior Property Tax Relief Program. This program allows municipalities to enact an ordinance to provide benefits to resident homeowners. In South Portland, the program is available to seniors age 68+ and who have also qualified for the State’s Property Tax Fairness Credit.
    FMI: https://www.southportland.org/departments/finance-department/south-portland-tax-assistance-program/.

In addition, a new law (LD 1508) establishes an eviction mediation program to provide mediation services to renters in forcible entry and detainer actions. If you wish to request mediation as a result of an eviction, you may do so and your landlord is now required to provide you with a court-approved form to request mediation.

For more information about exemptions and other property tax relief programs, contact our Assessing office at 767-7604. To discuss the Senior Property Tax Relief Program, call our Finance Department at 767-7612. To discuss your eligibility for a hardship abatement or possible general assistance aid, contact our Social Services office at 799-5511.