Capping Rates
Overview
Some municipalities will limit annual increases in assessed value of property with Homestead Exemption to a set percentage or the change in the Consumer Price Index, depending on whichever is lower. This will ensure that no assessment, will exceed the current fair market value. In some instances, this limitation will only apply to property value, not property taxes. As a result, Cap and Exemption are removed at the end of the calendar year if the property has been sold. Taxes are then calculated on the full Just/Market Value. As a result, the property will benefit from the limitations of the Cap in the second year of the new owner’s Homestead Exemption.
For example, if a property owner applies for and receives Homestead Exemption for 2022, the Assessed Value will be capped in 2023. In this instance, when determining Taxable Value, exemptions are subtracted from the Assessed Value to reach a Taxable Value. The Taxable Value is then multiplied by the annual Millage Rate to determine the amount of tax due.
In some instances, a change in property ownership will reset the Capped Value to full market value. As a result, it is important to know that property taxes will increase the following year as the assessed value must be adjusted to equal the current market value.
This can mean that an increase due to the removal of the Cap may result in the doubling or even tripling of taxes, depending on how long the previous owner had an exemption.
| NOTE: Refer to the rules for Capping and Exemptions in your municipality. |
Configuration
| NOTE: The following configuration can only be carried out by users with Administrator access rights. |
Configuration of the capping rates occurs in two (2) locations in the Govern New Administration (GNA).
Codes will need to be set up through the User Validation Table editor. These codes are used to populate the Code column in the Capping Rates editor.
User Validation Table Setup
The User Validation Table editor is accessed in the Govern New Administration (GNA).
To configure the codes for the user validation table …
1. Open the GNA.
2. Click Editors (menu) > User Validation Table Editor > Tax Billing.
3. In the (Tax Billing) User Validation Table Editor, click New to create a new table.
4. Enter CAPPING_RATE as the Table Name.
5. Enter a Description.
6. Click Codes to create the codes that will be in the table.
For Example:
In a municipality where the two required codes are Non Save Our Homes (NSOH), and Save Our Homes (SOH), these codes will need to be created.
7. Click Create New Item.
8. Enter SOH as the Code.
9. Enter a Short Description of Save Our Homes, and a Long Description.
10. Click Save.
11. Repeat the above step to create another code for Non Save Our Homes (NSOH).
12. Click Save to save this record and close the editor.
Now that the codes required for the Capping Rate have been created in the user validation table, they can be accessed in the Capping Rates editor.
Capping Rates Editor
The Capping Rate editor is accessed in the Govern New Administration (GNA).
To access the Capping Rate Editor…
- Open the GNA.
- Click Applications Configurations (Menu) > Real Property > Capping Rates.
- In the Capping Rates editor, click New to create a new line record.
- Enter the Year.
- Select the applicable Code from the combo box.
- Enter a capping rate percentage (%) under the Rate column.
- Click Save to save the record.
103-re-parm-CappingRates
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