Article X of the Constitution of Virginia mandates that all property shall be taxed. Furthermore, it requires such taxation be uniform upon the same class of subjects within the territorial limits of the taxing authority. Because revenue derived from real estate assessments makes up a significant portion of local government budgets, the importance of the process for determining a property’s fair market value cannot be understated. Tax rates vary from municipality to municipality and are subject to change. Therefore, in order to ensure that assessments are fair and equitable the Code of Virginia mandates the process be uniformly applied and in accordance with state statues and local ordinances.

Fairfax County, alone, has 362,089 individual properties to assess every year. As a result, the Department of Tax Administration uses accepted mass appraisal standards and techniques recognized by the International Association of Assessing Officers (IAAO) and other nationally recognized professional appraisal organizations. As the term implies, “mass appraisals” are different from appraisals of individual properties. When estimating the value of a group of properties, appraisers use different techniques based on the statistical analysis of large amounts of data. Properties are classified and stratified based on their characteristics with property type at the top of the hierarchy. Under the Code of Virginia, the Department of Taxation has established the following 7 classes:

  1. Single-Family Urban
  2. Single-Family Suburban
  3. Multi-Family Residential
  4. Commercial and Industrial
  5. Agricultural or Undeveloped – 20-100 acres
  6. Agricultural or Undeveloped – over 100 acres
  7. Tax Exempt

Once classified and stratified, Assessing Officers will collect and analyze data that provide market value indicators. This data includes local economic conditions, planning and zoning regulations, neighborhood boundaries, current construction cost data, income and expense data for rental properties, recent qualified real estate sales, etc. and comes from public records, real estate and construction professionals, property owners, and physical inspections. This data provides the groundwork for the appraisal process.

There are 3 traditional approaches to property valuation: Cost Approach, Sales Comparison Approach, and Income Capitalization Approach. Without going into detail for each, it is enough to note that one approach may be more applicable than another based on property class/type. Assessing Officers consider this in addition to their statistical analysis of market value indicators to create Valuation Models.  It is these Valuation Models that provide the basis for uniformity.

The authority to levy taxes is one of, if not, the greatest power accorded to government. When you’re taking people’s money you need to be able to defend and justify the amount you’re taking. In order to do that there must be objective measures to ensure that the process is applied equally to everyone/all properties. Assessing Officers use accepted mass appraisal standards and techniques recognized by national professional appraisal organizations because they provide a third-party standard that in turn creates a uniform framework under which properties can be assessed. Perhaps the most important takeaway is that uniformity refers to the process not the outcome.

Source: Virginia Department of Taxation, Board of Equalization Manual

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