Homeowners balked in 2023 when Isle of Wight County’s four-year reassessment of property values showed a 34% average rise in single-family home valuations, costing many of them several hundred dollars more on their real estate tax bills.

In hopes of lessening the sticker shock come 2027, county supervisors on Aug. 1 discussed increasing the frequency of reassessments.

According to Commissioner of the Revenue Gerald Gwaltney, state law mandates a default four-year cycle but allows supervisors to, by majority vote, increase the frequency to every two or every three years.

A two-year cycle, he said, is only allowed for counties that have an in-house assessor on staff, which Isle of Wight does not. The supervisors also have the option of calling for a mid-cycle “desktop review,” which would not require the hiring of new in-house personnel.

“I would not vote in favor of it,” said Supervisor William McCarty, who was joined in his opposition to the desktop review by Board Chairman Joel Acree.

Supervisors Rudolph Jefferson and Renee Rountree, however, said they support the idea.

“If we did it a little more often and perhaps use the desktop method then the increases wouldn’t be so shocking as they were the last time,” Rountree said.

The supervisors also discussed switching to a three-year reassessment, which, according to County Attorney Bobby Jones, would require a public hearing before the supervisors could vote to amend the county’s reassessment ordinance.

The change would also impact Isle of Wight’s two towns. Residents of Smithfield pay an additional 16 cents per $100 in assessed value, while residents of Windsor pay an extra 15 cents, to their respective towns on top of the 73 cents per $100 they pay to Isle of Wight.

 

How a ‘desktop review’ works

A standard four-year reassessment, Gwaltney said, begins a year in advance with the county soliciting bids and choosing a third-party appraiser. Going back to 2002, the county has awarded the job to Daleville-based Wampler Eanes, one of four firms in the state certified by the Virginia Department of Taxation to perform mass appraisals.

During last year’s reassessment, a team from Wampler Eanes visited every “improved” property, which refers to parcels of land containing any form of structure. The team then valued what was built using nationwide Marshall & Swift construction cost tables, and based on those results, defined 181 separate “neighborhoods.”

The Gatling Pointe development just outside Smithfield, for example, is divided by Battery Park Road into Gatling Pointe North and Gatling Pointe South. The homes in Gatling Pointe North are older than the ones in Gatling Pointe South and include waterfront properties; as such the two phases of the same development are considered different neighborhoods for assessment purposes. Recent sale prices then determine what percentage increase is applied to the valuation of homes in each neighborhood.

The desktop review process, Gwaltney said, is virtually identical, minus the “boots on the ground” field inspections. In a desktop review, he said, the assessor, rather than visiting each parcel, conducts a new analysis of recent sales. If a sale price appears outside the norm, an assessor may visit that particular parcel to determine why.

To have the results of a desktop review ready by May when reassessment notices are mailed, the supervisors would need to issue a request for proposals for an assessor by September, Gwaltney said. The new values would take effect July 1, 2025.

A three-year reassessment, by comparison, would entail in-person home visits by assessors and would result in new valuations taking effect July 1, 2026.

 

Why reassess more often?

Gwaltney said last year’s reassessment produced valuations at a 97% “sales ratio,” which refers to the gap between a home’s assessed value and sale price. A 97% sales ratio, he explained, means a house valued at $97,000 would sell for $100,000.

“You don’t want to be at the 100% market value; that means you have a good percentage of parcels being overassessed,” Gwaltney said. “You want to be in the 96% to 97% range.”

Part of what drove last year’s 34% average rise in single-family home values, Gwlatney said, were bidding wars over Isle of Wight’s limited supply of for-sale homes, resulting in many selling for well above asking price. This trend has continued into 2024, according to data Gwaltney presented to the supervisors.

As of July of this year, Isle of Wight’s sales ratio had fallen to 89%, which Gwaltney said means homes are selling for roughly 8% more than they were as of mid-2023.

“Tax assessments and market value often differ for several reasons, and it’s important to understand their distinctions and how they operate independently,” said Jay Hassell, a Smithfield-based Realtor. “Tax assessments provide a stable and equitable basis for property taxation, whereas market value reflects the current price a property would fetch in the open market. Increased frequency of assessments can help reduce the gap between the two but will never entirely eliminate the inherent differences due to the nature of each valuation method.”

Hassell said he personally considers a four-year reassessment “substantially more accurate than taking a snippet of a 12 or 24-month market cycle.”

“If two comparative homes go on the market two years apart, one sells in the market with a 2.5% (mortgage interest) rate, then two years later the comparative home goes on the market with a 6.5% rate, the sales price of the second home will likely be very different due to supply, demand, and increased PITI,” Hassell said, using an industry acronym for estimating homeownership expense, which stands for principal, interest, taxes and insurance.

An advantage of more frequent reassessments, Gwaltney said, in addition to avoiding the large market swings from waiting every four years, is the county’s sales ratio has a direct impact on the public service real estate tax revenue the county receives.

“Your public service revenues are things like Dominion (Energy), it’s the railroads, it’s the gas lines that run through, and their assessments are done by the State Corporation Commission or the Department of Taxation,” Gwaltney said. “Every year the county goes through a study with the tax department to  determine our sales ratio, as our ratio declines that assessment is applied to your public service assessment, so if our ratio there is at 89% we would receive only 89% of our public service money as opposed to July 1 where we were at 97%.”

Based on last year’s reassessment, Isle of Wight expects to take in $1.5 million in public service real estate taxes by June 30, 2025, up nearly 15% from the $1.3 million budgeted by the same date for 2024.

Capturing the tax impact of the 8% average increase in home sale prices since mid-2023 could also help recoup some of the budgetary impact from the tax relief Isle of Wight provides its population of disabled veterans.

In 2011, the General Assembly passed legislation allowing 100% tax relief on residences located on up to an acre of land and one vehicle to veterans identified by the Veterans Administration as having a service-connected disability, regardless of income. Isle of Wight has nearly 700 veterans receiving the 100% tax exemption, which accounts for just over $2 million, or 4.5%, of the county’s real estate tax base, and is not fully offset by new construction, which brings in $600,000 to $700,000 annually. Isle of Wight has the second-highest percentage of tax-exempt veterans in the state, Gwaltney said.

Separate from the state-mandated disabled veterans exemption, Isle of Wight voluntarily offers a real estate tax credit of up to $2,000 to county residents ages 65 and up or who are totally disabled, which is income-tested.

Editor’s note: This story was updated at 12:18 p.m. on Aug. 5 with comments by Jay Hassell, a local Realtor.