Information for newer homeowners

If you are new in town, there are a few things that may helpful for you to know about home ownership in Decatur.

First, if your home is your principal residence, you are eligible to apply for a homestead exemption which reduces the amount you pay in property taxes. You must apply separately with Decatur and DeKalb. Applying for a homestead exemption with one office doesn’t grant you both exemptions. Please apply for the City homestead exemption at www.decaturga.com/homestead by March 15, 2015, in order to receive an exemption for 2015. If the home seller had homestead exemption, that remains valid for 2014 even though you’re a new owner.

Second, please be aware that we receive all official ownership and address records from DeKalb County. It is your responsibility to follow up to ensure that DeKalb has the correct record, which you can double-check at http://web.co.dekalb.ga.us/TaxCommissioner/. If you recently purchased your home, you must also notify Decatur of the change to ensure your tax bills are sent to the right party.

Third, Decatur sends bills for property taxes on April 1, due June 1, and October 20, due December 20. Please check the status of your city property taxes at www.decaturgatax.com, even if you were told that the taxes “were taken care of at closing.” Note that taxes may be due both to DeKalb and Decatur and we have different billing schedules.

For further information you may contact the DeKalb County assessors at 404-371-0841, the DeKalb tax commissioner at 404-298-4000, and the City Revenue Division at 404-370-4100.

Changes in filing requirements make online renewal easier for most businesses

For the past few years, businesses have been required to submit two immigration-related affidavits annually when they renewed their business license per state law. As I wrote about this summer, those requirements have been relaxed.  Now only certain businesses will be required to refile these affidavits under specific circumstances as follows:

In other words, businesses owned by U.S. citizens with 10 or fewer employees who have already filed their paperwork in past years are exempt from re-filing.  This is great news for businesses that want to renew their license online (http://decaturgatax.com/businesslicense) in Decatur because it means they will be able to do it without having to upload affidavits. The upload box on our renewal website is now an optional field. All we will need is the business's telephone number, quantity of employees, and your online payment. There are no convenience fees, surcharges, or markups.

New businesses still need to file both affidavits with their license application.

10 features at www.decaturgatax.com

If you haven't had the chance before, check out the different things you can do through our website at www.decaturgatax.com:

1. View six years of tax history for any property in Decatur
2. Make a tax payment online with any major credit card 
3. View or print a tax receipt or a tax bill for your records 
4. Submit a change of mailing address 
5. View three years of business license records for any local business 
6. Renew or re-print a business license 
7. View commercial sanitation accounts and make sanitation payments 
8. Search, view, and pay personal property (business inventory) taxes 
9. Apply for a basic homestead exemption
10. Give your feedback about the website through a survey 

 Additional features are coming soon!

How fees on tax bills work in Decatur

Apart from taxes themselves, the only fees that appear on Decatur's tax bills are for residential sanitation and stormwater (runoff/drainage). The fee amounts are adopted by the City Commission annually.

For 2014, the residential sanitation charge was $237.  The sanitation fluctuates a little each year but has generally been around $230 for the last several years.  Residential sanitation service is a "per household" charge.  For example, a duplex owner would be billed $474 rather than $237; a quadraplex would be billed $948, etc.

The standard stormwater charge for a single family dwelling is $75 annually.  The stormwater has been consistent for many years.  The stormwater assessment for non-single family dwellings, including commercial properties, is based on the amount of impervious surface at the property.  Properties without structures still have stormwater charges because of pavement, driveways, parking decks, or other impervious surfaces onsite.

Local businesses have a stormwater charge but no residential sanitation charges (although any business can sign up for commercial sanitation and recycling with the city). Tax-exempt entities such as government entities, schools, and churches have to pay a stormwater bill.

The City doesn't add fees to tax bills for street lamps, sidewalks, speed bumps, or sewer services.

Georgia expands its mortgage assistance program

 

The State of Georgia has expanded its mortgage assistance to certain homeowners on the basis of unemployment or other hardship through a program called "HomeSafe Georgia." The program began in 2011, but eligibility requirements were broadened earlier this year.  This information comes from the Department of Community Affairs which administers the program:

• Homeowners who became unemployed or underemployed in the last 36 months may qualify for assistance with their mortgage payment. NEW: Mortgage payment assistance is available for up to 24 months total, up from 18 months previously.
• NEW: Homeowners who can make their mortgage payments now, but have become delinquent, may qualify for reinstatement. The delinquency must be related to a military, medical, or death hardship that began in the most recent 36 months. A one-time payment of up to 12 mortgage payments is available for qualifying homeowners.
• NEW: Homeowners with a permanent reduction of income may qualify for up to $30,000 to reduce their mortgage payment to an affordable level. Income reduction due to the death of a spouse, permanent disability, or retirement due to unemployment may qualify homeowners for loan term modifications made by participating lenders. The lender must be participating in the HomeSafe Georgia program.

Property taxes including basic homestead exemptions in Decatur and DeKalb

To recap last week's post, a total year's property tax bill in Decatur in 2014 would be about 8 percent lower than for an equally valued property in DeKalb County if the property owner had no homestead exemptions (for example, commercial properties, rental properties, investment properties, second homes, etc).  When Decatur and DeKalb's bills within the City are added together, they would be about 14 percent higher than what the property would have been taxed in unincorporated DeKalb:

The differences are larger if the property owner resides on the property and has a basic homestead exemption with both the City and County.  The HOST credit on County bills is tricky to compute, but here are my estimates for 2014 factoring in owner occupancy:

Please note that these comparisons don't include fees for sanitation and stormwater drainage.  Tax scenarios for senior residents with additional homestead exemptions would vary significantly based on age, income, and in some cases the nature of the income (ie, retirement income versus non-retirement income), and jurisdiction.  There are additional differences across jurisdictions that could affect property insurance and flood insurance rates.

As always, this blog is not intended to give legal, political, financial, or tax advice, but to give information and answer questions generally about Decatur property tax issues. Please contact my office to discuss the specifics of your account; for tax advice please contact an independent tax professional.

Comparing property taxes in Decatur and unincorporated DeKalb

Following up on yesterday’s post about tax rate changes from 2013 to 2014, I wanted to broaden the comparison to add unincorporated DeKalb’s tax rates for 2014.

Property tax rates are currently lower in Decatur than in unincorporated DeKalb County. A property without homestead exemptions located in Decatur would have a tax bill 7.5 percent lower than a property with the identical value in DeKalb County (even when factoring in Decatur’s higher assessment ratio of 50 percent compared to the county’s ratio of 40 percent) in 2014. However, Decatur residents also pay property tax bills to DeKalb, which are based on a lower rate than what unincorporated residents pay. Once the city and county tax bills are added together, a Decatur property owner's total property tax liability for 2014 would be 13.8 percent higher than in unincorporated DeKalb for a property with the same value.

Here’s an illustration of estimated taxes based on millage rates by jurisdiction for 2014 depending on property values for a property without homestead exemptions:

Some confusion about true size of the difference between City and County tax bills comes in partly because some City residents assume that their County tax bill is what they would pay if they were located outside the City in unincorporated DeKalb. But it isn’t. For example (again assuming no homestead exemptions for simplicity’s sake), if a Decatur property owner was de-annexed, their City bill would go away the following year, but their County property tax bill would increase by about 80 percent the following year assuming steady millage rates and property values. Similarly, if an unincorporated property owner were annexed into Decatur, they would begin paying City property taxes the next year but their County tax bill would drop by about 80 percent the next year. But again, individual circumstances will always vary on the basis of values, appeal status, exemptions, and fees. And all the millage rates can change every year which would change the math.

Aggregate property tax rates fall in Decatur in 2014

The total, effective tax rate for property owners in Decatur is decreasing by 5.5 percent in 2014 compared to 2013 based on decreases in 1) the Decatur school millage rate, 2) DeKalb’s incorporated millage rate for Decatur, and 3) the State of Georgia millage rate. However, individual property owners’ actual tax bills will vary significantly based on their value assessed by DeKalb County. Bills will also vary on the basis of homestead exemptions and fees.

Here are the details:

1. The property tax millage rate for Decatur’s schools decreased from 20.9 in 2013 to 20.5 mills for 2014. That reduces the combined millage (all city tax rates plus the school rate) from 33.9 in 2013 to 33.5 mills for 2014. 
2. Property owners in Decatur also pay property tax to DeKalb County. (But the bill they pay to DeKalb is about 80 percent less than what property owners in unincorporated DeKalb pay to the County.) The county tax rate for City residents is determined by the DeKalb County Board of Commissioners. During their July 7 meeting, county commissioners approved a reduction in the county millage rate in Decatur from 12.03 mills in 2013 to 9.58 mills in 2014. 
3. The millage rate charged by the State of Georgia, which is collected through county bills, also fell from 0.15 in 2013 to 0.1 in 2014 as part of a five-year phase-out of state property taxes. 

As an example, if DeKalb determined the value for a non-homesteaded property of $200,000, it would have paid $3,390 in City property taxes and $974.40 in County taxes for a total property tax liability of $4,364.40 for 2013. The same property with the same value in 2014 would owe $3,350 in City taxes and $774.40 in County taxes for a total property tax liability of $4,124.40 for 2014.  Here are some more examples comparing properties with different values year-over-year:

7 cities in Georgia with assessments other than 40 percent

Following up on yesterday’s post, Georgia’s cities weren’t included in the original equalization of assessment ratios to 40 percent is 1968. The General Assembly revisited that in 1972, at which point 40 percent was established as the ratio for cities except for those that already had ratios larger than 40 percent. At the time, 12 such cities were grandfathered in with older, higher ratios.

As of 2013, according to Department of Revenue data, there are still at least seven cities remaining with an assessment ratio other than 40 percent:

• Gainesville (northeast Georgia)—100 percent 
• Buchanan (west Georgia)—100 percent 
• East Dublin (middle Georgia)—47 percent 
• Chatsworth (northwest Georgia)—75 percent 
• Americus (southwest Georgia)—50 percent 
• Dalton (northwest Georgia)—100 percent 
• Decatur—50 percent 

On its GeorgiaFacts.net website, the Georgia Department of Economic Development says, “The only realistic way to compare property taxes from different locations is to use 'effective tax rates' (tax rate multiplied by assessment ratio).” True. It would be impossible to estimate or compare property taxes across Georgia without at least knowing what the property value, assessment ratio, and millage rate.

How Georgia ended up with 40 percent property tax assessments

I've been somewhat surprised by the number of times I've been asked over the years why property tax assessments in Georgia are generally 40 percent.  To answer that question, we have to go way back...

According to Georgia State University’s Fiscal Research Center, property owners in Georgia reported the value of their own property for tax purposes throughout the 1800s. There were no property assessors. As you can imagine, this led to under-reporting of property values. Counties adopted millage rates as high as 60 or 70 mills and applied assessment ratios of varying amounts in order to balance their budgets.

The state began collecting its own share of property tax revenues in the 1900s by imposing a 5-mill rate, which was later reduced to one-quarter of a mill, and is currently being phased out altogether.  The state's share is collected by the counties and turned over to the state.

The problem with these two circumstances—varying assessment ratios coupled with a statewide property tax—was that they resulted in the state receiving taxes at non-uniform rates depending on the county where you owned property. This violated the legal principle of uniformity in property taxation. In 1965, property owner Alex McLennan sued on that basis in Fulton County superior court. The court agreed and ordered ratios to be equalized statewide.

At that point state officials basically had to pick a number. Dozens of Georgia counties already had assessments close to 40 percent on the books, so that was deemed the least disruptive approach. County ratios were set at 40 percent by state law in 1968.

While using a rate other than a full market or cash value of 100 percent may seem somewhat unusual, it’s actually pretty common in the United States. Only about half of states use a standard assessment ratio of 100 percent according to data from the Lincoln Institute of Land Policy. Some states have less than Georgia’s 40 percent, such as Arkansas’s 20 percent and Illinois’s 33 percent.  Several have more (even in excess of 100 percent) such as Maine which can range from 70 to 110 percent and Massachusetts which can range from 65 to 150 percent. Many states apply variable rates based on the class of the property being taxed.

More on city assessment ratios in Georgia later this week.