Guide to Revaluation
In Fiscal Year 2010, the Mill Rate decreased in large part to property revaluation, which is mandated by state law every five years. Windsor’s revaluation showed that property values had on average increased from October 2003 to October 2008, so the Mill Rate could be lowered and still produce the needed revenue.
To help residents with the financial impact of revaluation, in FY 2010 the town council implemented a five-year phase-in of the increase in assessments that resulted from revaluation.
Here’s an example, but two definitions first:
- Mill Rate – One “mill” produces one dollar of tax for each $1,000 of property valuation.
- Assessed Valuation – Set by statute as 70% of current fair market value
The fair market value on your home in 2008 was $200,000. Its assessment was 70% of that or $140,000 and the Mill Rate was 29.30. Your taxes that year were $4,102.
The following year, after revaluation, your home had a fair market value of $260,000 and an assessed valuation for tax purposes of 70% of that or $182,000. Your tax would be calculated at a Mill Rate of 25.98, the Mill Rate before phase-in was adopted. The resulting bill would be $4,728.36.
Phase-in spreads the increase in valuation of $42,000 evenly over five years ($8,400 per year)
Year 1 phase-in valuation (has already occurred) - $140,000 plus $8,400 = $148,400
Year 2 phase-in valuation - $140,000 plus $16,800 = $156,800
Year 3 phase-in valuation - $140,000 plus $25,200 = $190,400
Year 4 phase-in valuation - $140,000 plus $33,600 = $173,600
Year 5 phase-in valuation - $140,000 plus $42,000 = $182,000
In year 1, the tax would be $4,205.66 with phase-in instead of $4,728.36 without it. It isn't possible to calculate the tax for years 2 through 5 in this example because the town council sets the Mill Rate each year based on the town's income and spending plan. However, the beneficial effect of phase-in is maintained.