Oregon’s property tax system is genuinely unusual, and if you’re buying, selling, or simply owning a home in Deschutes County, understanding how it works will save you money and confusion. The system was reshaped by two ballot measures in the 1990s, and those measures created a framework that confuses even longtime Oregonians. This guide explains it plainly, with specific numbers and examples from Deschutes, Crook, and Jefferson counties.
The Basics: Assessed Value vs. Market Value
This is the single most important concept in Oregon property taxes, and where most confusion starts. In Oregon, your property taxes are not calculated based on your home’s market value. They’re calculated based on your home’s assessed value, and those are two very different numbers.
Market value (also called real market value or RMV) is what your home would sell for on the open market today. Your county assessor estimates this each year.
Assessed value (AV) is the number your taxes are actually calculated on. Thanks to Oregon’s Measure 50, passed in 1997, assessed values are limited in how fast they can grow. Assessed value can increase by a maximum of 3% per year, regardless of how much the market value increases.
Here’s what that means in practice: A home purchased in 2005 with a market value of $300,000 might have a current market value of $650,000 but an assessed value of only $450,000. The homeowner’s taxes are based on that $450,000 assessed value, not the $650,000 market value. This creates a significant tax benefit for long-term homeowners.
The Exception Exception
Assessed value can never exceed market value. If your market value drops below your assessed value (as happened for some properties during the 2008 to 2012 downturn), your assessed value drops to match. When the market recovers, your assessed value can increase by more than 3% per year until it catches back up to its capped growth trajectory, a concept called “the gap.”
Oregon’s Measure 5 and Measure 50
Two ballot measures fundamentally shaped Oregon property taxes. Understanding them explains most of the quirks.
Measure 5 (1990)
Measure 5 capped property tax rates at $15 per $1,000 of real market value. This cap is split:
- $5 per $1,000 for schools (education)
- $10 per $1,000 for general government (cities, counties, special districts)
If the total tax rates for all taxing districts in your area exceed these caps, the rates are “compressed” (reduced proportionally) to stay within the limits. This compression mostly affects school funding, which is why Oregon now funds education largely through the state income tax rather than property taxes.
Measure 50 (1997)
Measure 50 froze assessed values at approximately 90% of their 1995 market values and limited annual assessed value growth to 3%. This is the measure that created the gap between assessed and market values. It was designed to provide tax stability for homeowners, and it does, but it also creates some counterintuitive outcomes.
How Tax Rates Work
Your property tax bill is calculated by multiplying your assessed value by the combined tax rate of all taxing districts that serve your property. These districts include:
- Deschutes County
- Your city (Bend, Redmond, Sisters, La Pine, etc.), if you’re within city limits
- School district
- Community college district (Central Oregon Community College)
- Fire district
- Road district (if rural)
- Various special districts (library, parks, 911, etc.)
- Any voter-approved local option levies and bonds
Typical Tax Rates
Tax rates in Central Oregon vary depending on which city and districts you’re in. Here are approximate total rates per $1,000 of assessed value:
- Bend (within city limits): $13 to $16 per $1,000 of assessed value
- Redmond: $12 to $15 per $1,000
- Sisters: $10 to $13 per $1,000
- La Pine: $9 to $12 per $1,000
- Unincorporated Deschutes County: $8 to $11 per $1,000
- Prineville (Crook County): $11 to $14 per $1,000
- Madras (Jefferson County): $12 to $15 per $1,000
For a home in Bend with an assessed value of $400,000 and a combined rate of $14.50 per $1,000, the annual property tax would be approximately $5,800, or about $483 per month.
Inside City vs. Outside City
Living inside a city’s limits versus in unincorporated county land makes a notable difference. Within Bend city limits, you pay city taxes plus all the special district taxes. Outside city limits, you skip the city tax but may pay for rural fire protection and road districts. The net difference is typically $1 to $3 per $1,000 of assessed value, which on a $400,000 assessed value means $400 to $1,200 per year.
How Taxes Change When a Home Sells
This is where sellers and buyers both need to pay attention. When a property sells in Oregon, the assessed value does not reset to the sale price. The assessed value continues on its Measure 50 trajectory, growing at the 3% annual cap from the previous year’s assessed value.
This is different from states like California (Proposition 13) where the assessed value resets to the sale price upon transfer. In Oregon, you inherit the property’s existing assessed value, which could be significantly below what you paid.
This creates two scenarios:
Buying a long-held home: If you buy a home from someone who owned it for 20 years, the assessed value may be well below the purchase price. Your annual tax bill will be based on that lower assessed value (growing at 3% per year), which is favorable.
Buying new construction: New construction has no Measure 50 history, so the initial assessed value is set closer to the actual sale price (typically around 90% to 95% of the purchase price). This means new construction often carries higher property taxes than comparable existing homes.
Supplemental Taxes and Changes
Oregon does not have a supplemental tax system like California. When you buy a home, you won’t receive a surprise supplemental tax bill. However, be aware that:
- Improvements trigger reassessment. If you add a bedroom, finish a basement, or build a new structure, the county assessor will add the value of that improvement to your assessed value. This addition is based on the improvement’s value, not the 3% cap, so a major renovation can bump your assessed value significantly in one year.
- Tax statements come in October for the fiscal year starting July 1. Payment is due November 15 for full payment (with a 3% discount), or in thirds on November 15, February 15, and May 15.
- Always take the discount. If you can pay your full year’s taxes by November 15, the 3% discount is essentially free money. On a $6,000 tax bill, that’s $180 saved.
Tax Exemptions and Reductions
Several exemptions can reduce your property tax burden in Oregon:
Homestead Exemption
Oregon does not have a general homestead exemption like many states. However, there are specific programs:
Senior and Disabled Citizen Property Tax Deferral
Oregon allows homeowners who are 62 or older (or disabled) with household income below a certain threshold (approximately $49,000 as of recent years, adjusted periodically) to defer their property taxes. The state pays your property taxes, and the deferred amount plus 6% interest becomes a lien on your home, payable when you sell or pass away. This can be a valuable tool for seniors on fixed incomes.
Disabled Veteran Exemption
Veterans with a 40% or greater service-connected disability (or their surviving spouses) may qualify for a property tax exemption of $24,000 to $28,000 of assessed value, depending on the year and disability rating. On a typical Central Oregon tax rate, this exemption saves approximately $300 to $450 per year. Veterans must apply through the county assessor’s office by April 1 each year.
Active Duty Military Exemption
Active duty military members stationed in Oregon can exempt up to $60,000 of assessed value from taxation. This exemption must be renewed annually.
Property Tax Exemption for Low-Income Seniors
The Senior Property Tax Freeze program allows qualifying seniors (65 or older with household income below approximately $44,000) to freeze their property taxes at the current amount. Taxes still accrue, but you don’t pay the annual increases while you qualify.
How to Appeal Your Property Tax Assessment
If you believe your assessed value or market value is incorrect, you have the right to appeal. Here’s the process:
Step 1: Review Your Statement
When you receive your tax statement in October, compare the listed market value to what you believe your home is actually worth. Also check the assessed value and make sure it reflects the 3% annual increase from the prior year (unless improvements were made). Look for any errors in the property description such as incorrect square footage, bedroom count, or lot size.
Step 2: Contact the Assessor Informally
Before filing a formal appeal, call the Deschutes County Assessor’s office. Many issues, especially factual errors like incorrect square footage, can be resolved with a phone call. The assessor’s staff can explain how they arrived at your values and may agree to adjust them if you present compelling evidence.
Step 3: File a Petition with the Board of Property Tax Appeals
If the informal approach doesn’t resolve your concern, file a petition with the county Board of Property Tax Appeals (BOPTA). The deadline is December 31 (or the first business day after, if December 31 falls on a weekend). You’ll need:
- Your tax account number
- The value you believe is correct
- Evidence supporting your claim (comparable sales, a recent appraisal, photos showing condition issues)
The hearing is relatively informal. You’ll present your case to the board, and the assessor’s office will present theirs. The board makes a decision, usually within a few weeks.
Step 4: Oregon Tax Court
If you disagree with the BOPTA decision, you can appeal to the Oregon Tax Court Magistrate Division. This is a more formal process and may warrant hiring a property tax attorney or appraiser. Most residential appeals are resolved at the BOPTA level.
Property Taxes and Your Sale
When you sell your home, property taxes are prorated at closing. If you’ve prepaid for the year and close in March, you’ll receive a credit for the months remaining. If you haven’t yet paid and close after November 15, the buyer will receive a credit for the period you occupied the home. Your title company handles this calculation, but review it on the closing statement to make sure it’s correct.
For buyers, understanding the property tax trajectory is important for budgeting. The assessed value will grow at 3% per year, which means your property taxes will increase by roughly 3% annually even if the tax rate stays flat. On a $5,000 annual tax bill, that’s approximately $150 more per year, compounding.
Voter-Approved Bonds and Levies
On top of permanent tax rates, voters periodically approve local option levies and general obligation bonds. These add to your tax bill and are a common source of confusion when homeowners see their taxes increase by more than the expected 3%.
Local option levies fund specific services for a defined period, typically three to five years. Bend has approved levies for parks, transportation, and affordable housing programs. General obligation bonds, often for school construction or infrastructure projects, add to the rate for the duration of the bond repayment (typically 15 to 30 years). These voter-approved additions are layered on top of the permanent rate, which is why the total rate can fluctuate year to year.
When evaluating a property, ask your agent or the county assessor which levies and bonds currently apply to that tax code area, and when they expire. A tax bill that includes a levy expiring next year will decrease; one that just had a new bond approved will increase.
Resources
Here are the key contacts for property tax questions in Central Oregon:
- Deschutes County Assessor: 541-388-6508, 1300 NW Wall St, Bend
- Crook County Assessor: 541-447-6555, 300 NE Third St, Prineville
- Jefferson County Assessor: 541-475-4451, 66 SE D St, Madras
You can look up any property’s assessed value, market value, and tax history on the Deschutes County Assessor’s website at no charge. This is useful both for understanding your own property’s tax situation and for evaluating properties you’re considering purchasing.
The Bottom Line
Oregon’s property tax system is unusual but ultimately favorable for homeowners who understand it. The 3% annual growth cap on assessed values provides genuine tax stability, and the gap between assessed and market values can be significant for long-term owners. If you’re buying, factor property taxes into your monthly budget based on the actual assessed value (ask your agent for the property’s current tax bill), not a percentage of the purchase price. If you’re selling, prorated taxes are handled at closing, but make sure you understand any exemptions that might not transfer to the buyer. Browse current listings and check property tax history as part of your evaluation, or reach out to our team for help navigating the details.