Document Type

Working Paper

Publication Date



Tax assessment -- Oregon -- Portland, Housing -- Oregon -- Finance, Tax assessment -- Effect of financing on

Physical Description

29 pages


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 .


Catalog Number DP87-3.

A product of the Center for Urban Studies, College of Urban and Public Affairs, Portland State University.

Persistent Identifier