Tuesday, January 21, 2025
City of Merrill residents received their 2024 Real Estate Tax Bills just before Christmas in December, and some residents have contacted the Merrill Foto News in an effort to understand the increase on those tax bills. Understandably, no one likes to see their bill increase, and many residents did see an increase of varying amounts on their 2024 bill. This series will help explain how real estate property taxes are calculated, why some homeowners saw their real estate tax bill increase, and why some homeowners’ tax increases were more or less than others.
Article VIII of the Wisconsin State Constitution requires the uniform taxation of property and also provides property taxation standards, including those related to forest property and that taxation of agricultural land and undeveloped land does not need to be uniform with the taxation of other real property.
The State Legislature enacts all property tax and assessment laws. Property tax assessment laws are covered in Ch. 70, Wis. Stats. As a rule, State and municipal property, public and private school property, cemeteries, property owned by churches and religious organizations, property owned by certain non-profit entities, and a few other properties for specific uses are exempt from taxes and are listed in that statute.
Property values are the first thing shown in the large set of boxes on each homeowner’s 2024 Real Estate Tax Bill. An assessed value is set for the value of the land plus an assessed value for the improvements (buildings or structures on that property), with a total assessed value being the combination of the two. Below that an estimated fair market value is show for the value of the land plus an estimated fair market value for the improvements on that property, with a total estimated fair market value being the combination of those two numbers.
An assessment is the value an assessor places on your property. This value is used to calculate how much tax (what portion of the local property tax levy) is due for this particular property. Under State law, all non-agricultural assessments must be based on the property’s market value as of January 1; however, that law recognizes every municipality cannot be assessed at market value each year. It would be burdensome and costly to undergo a reassessment every year. So the law requires each municipality to be within 10% of market value of the property, either above or below, so somewhere between 90% and 110% of market value.
Assessors must be certified to ensure they are applying the same rules and guidelines to their valuation of properties as required by State law. They classify real estate in one of eight statutory classifications: residential (which includes vacant lots in residential neighborhoods), commercial, manufacturing, agricultural, undeveloped, agricultural forest, productive forest land, and other.
The assessed value on a Real Estate Tax Bill is set for January 1 of each year and may change from year to year based on known improvements to the property, such as those indicated when a homeowner is issued a building permit. The reason for the building permit indicates the types of improvements being made and the assessed value may be adjusted accordingly for the following January 1. Likewise, if real estate is sold, the assessed value may be adjusted accordingly for the following January 1 based on the price the purchaser pays for the property. How much someone is willing to pay for a property is indicative of its fair market value at that time.
For properties within the city of Merrill that have made improvements and had building permits issued or for properties that sold within the last couple of years, the assessed value has been adjusted accordingly. However, for other properties within the city, assessed values have not changed since the last reassessment was completed, which City of Merrill officials indicate was in 2016.
Real estate values have increased significantly in that time. Anyone who has been looking at the price of real estate in recent years—looking to buy a new home or even to sell their current home—knows that real estate values have increased significantly. In fact, less than a year ago properties locally, statewide, and beyond were selling so quickly and real estate was in such demand that sellers were getting offers on their properties within days of putting them on the market and for thousands of dollars more than their asking price, as buyers were competing heavily to purchase properties. Of course, certain properties were more desirable than others, and the most desirable properties or the kinds of properties in most demand were commanding the best prices. With the inflation of home and real estate prices, the 2016 assessed values of properties within the city of Merrill quickly became out of date and no longer accurately reflected the properties’ fair market value in the current market.
Properties within the city that had their assessed values adjusted over time due to building permits being issued or were adjusted according to the amount paid for them if they were sold/purchased within the last couple of years, were in closer alignment to the fair market value in the current market, but that wasn’t true for the majority of properties. Most were assessed at far less than 90% of their fair market value, so those properties deviated by more than 10% of the market values, and this has been the case for approximately the last four year.
In this case, the State mandates that municipalities go through a reassessment process to be sure all property owners are paying their fair share of the taxes across an even playing field. Thus, all properties in the city of Merrill were reassessed for 2024 and assigned current values in keeping with the current real estate market.
Prior to the reassessment, those properties whose assessed values had been adjusted due to permits being issued or according to the price they sold for (if they had been recently sold) were likely paying a higher proportion of taxes, due to their increased assessed value, while those homeowners whose assessed value had not changed much—or at all—since 2016 were paying less than their proportionate share.
This is why, if Merrill residents compare the values in these boxes on their 2024 Real Estate Tax Bill with the values in these same boxes on prior years’ tax bills, they will see a different number. Those property owners who have been issued building permits to do work on their property or who recently purchased their property will see that their assessed and estimated fair market values changed somewhat, but those property owners whose assessed and estimated fair market values have not changed much—or at all—since 2016 will see a significant difference in value which reflects the current real estate market and more closely aligns with the price that property would command on the market if sold today.
For some residents—including City of Merrill Mayor Steve Hass—the assessed value of their property is now almost double what it was on their 2023 Real Estate Tax Bills. His modest single-family home, sitting on a normal-sized lot in Merrill, went from a total assessed value of $59,400 in 2023 to a total assessed value of $116,800 in 2024.
Real Estate Tax Bills are a matter of public record. To review a copy of the Real Estate Tax Bills for your property address from 2024 back to and including 2018 and the total tax amount due for your property address back to and including 2012, go to: tiny.cc/Merrill. You can also see the Real Estate Tax Bills for your neighbors or any other property within Lincoln County at this same site, so feel free to look at how your property values compare to other properties.
Next week’s Merrill Foto News will continue with Part 2 of this series on Property Taxes Explained.
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