The purpose of a general reappraisal is to reestablish equity and fairness between properties that may have changed in value at different rates depending on property type and location. All real property in Wake County was reappraised at 100% of fair market value as of Jan 1, 2020. The prior assessed value represented 100% of fair market value as of Jan 1, 2016.
As an example, take three houses in Wake County that all have a market value of $200,000 as of Jan 1, 2016. If the Wake County tax rate is .50 then the 2016 tax bill for all properties is $1,000. The formula being used is (Value / 100) * Rate or ($200,000 / 100) * .50 = $1,000.
Now, let us say that House #1 is in a desirable neighborhood where values are rapidly increasing. On Jan 1, 2020, this house is worth $295,000. House #2 is in a more stable neighborhood where values are increasing at a slower rate. On Jan 1, 2020, this house is worth $225,000. House #3 is in a declining neighborhood, and on Jan 1, 2020 is only worth $175,000.
Without a general reappraisal, all three homeowners would continue to pay the same amount of taxes even as their homes move further apart in value.
With a general reappraisal, all three homeowners will have different tax bills based on the current value of their property. If the tax rate was unchanged for 2020, House #1 would have a liability of $1,475. House #2 would have a liability of $1,125. House #3 would have a liability of $875.
Now, let us say that the revenue neutral rate after the reappraisal is .43. This means that a tax rate of .43, applied to all of the property in the County, would generate the same amount of revenue in 2020 as the .50 rate generated in 2019.
Our new bills look like this: House #1 will pay $1,269, House #2 will pay $968, and House #3 will pay $752.
The overall change in value of the properties together was +15.8%. This is the difference between the 2016 combined value of $600,000 and the 2020 combined value of $695,000. Because House #2 had a value increase of less than 15.8%, its bill goes down with the revenue neutral rate. House #1 increased in value by more than 15.8%; this bill will go up. House #4 illustrates a home whose value increased at the average rate.