Financial support was provided by the Portland Board of Realtors, the Oregon chapter of the Appraisal Institute, the Portland chapter of the Society of Real Estate Appraisers and the Multnomah County Office of Assessment and Taxation.
Tax assessment -- Oregon -- Portland, Housing -- Oregon -- Finance, Tax assessment -- Effect of financing on
This paper argues that tax inequities are produced when property assessments fail to account for the effects of creative financing . Changes in equity resulting from the capitalization of creative financing in housing prices are estimated from a sample of properties in Portland, Oregon using the Paglin-Fogarty model. The principal findings of the analysis indicate that : 1) on average, creatively financed houses have a higher mean assessment ratio than conventionally financed houses; 2) the assessment penalty for creative financing is systematically related to the market value of houses, and is both absolutely and relatively larger for houses with lower market values; 3) while the assessment policy in effect during the study period dictated that no adjustments should be made for creative financing, evidence of negative capitalization of financing in assessments was found . This result may have been produced by the appeals process and, given the cost of appeal relative to the benefits of a reduced assessment, would most likely have been associated with houses having higher valued financing packages . This would explain why the assessment penalty for creative financing falls more heavily on houses with lower market values .
Strathman, James G. and Paglin, Morton, "Tax Equity Effects of Creative Financing: Empirical Evidence" (1987). Center for Urban Studies Publications and Reports. 49.