2007 ORS 308.205¹
Real market value defined
  • rules

(1) Real market value of all property, real and personal, means the amount in cash that could reasonably be expected to be paid by an informed buyer to an informed seller, each acting without compulsion in an arm’s-length transaction occurring as of the assessment date for the tax year.

(2) Real market value in all cases shall be determined by methods and procedures in accordance with rules adopted by the Department of Revenue and in accordance with the following:

(a) The amount a typical seller would accept or the amount a typical buyer would offer that could reasonably be expected by a seller of property.

(b) An amount in cash shall be considered the equivalent of a financing method that is typical for a property.

(c) If the property has no immediate market value, its real market value is the amount of money that would justly compensate the owner for loss of the property.

(d) If the property is subject to governmental restriction as to use on the assessment date under applicable law or regulation, real market value shall not be based upon sales that reflect for the property a value that the property would have if the use of the property were not subject to the restriction unless adjustments in value are made reflecting the effect of the restrictions. [Amended by 1953 c.701 §2; 1955 c.691 §§1, 2; 1977 c.423 §2; 1981 c.804 §34; 1989 c.796 §30; 1991 c.459 §88; 1993 c.19 §6; 1997 c.541 §152]

Notes of Decisions

True Cash Value

Book value is not, as matter of law, true cash value. La Pointe's, Inc. v. Dept. of Rev., 4 OTR 512 (1971)

Without a valid founda­tion for different assess­ments, the assess­ment of part of the land of a shopping center at a dollar rate per square foot different from the remaining land of the center is a viola­tion of the uniformity clauses of the Ore. Const. Henshaw v. Dept. of Rev., 5 OTR 263 (1973)

In reaching determina­tion of true cash value of "super-custom built home" appraisers for both parties properly recognized that overbuilding is type of obsolescence which must be considered in determining value of prop­erty for assess­ment purposes. Fritz v. Dept. of Rev., 7 OTR 375 (1978)

Where prop­erty was listed for sale at price of $230,000 but evidence was clear that nothing came of the listing in spite of market ac­tivity, such listing price was not evidential of market value. Tannler v. Dept. of Rev., 7 OTR 392 (1978)

Goal of appraisal process is to determine prop­erty's true cash value, which is its market value as of assess­ment date. Bylund v. Dept. of Rev., 7 OTR 532 (1978)

Evidence showed that on facts of case income approach yielded better measure of prop­erty's true cash value than cost approach, but because this approach resulted in higher value than that pled by Depart­ment of Revenue decree was modified to conform to pleadings. Brooks Resources Corp. v. Dept. of Rev, 286 Or 499, 595 P2d 1388 (1979)

Enforce­ment of Revenue Depart­ment's sub­poe­na of cable television company's income and expense records is proper where company can cite no rule or regula­tion, promulgated under this sec­tion, that would exclude from determina­tion of true cash value considera­tion of income derived from opera­tions. Southern Oregon Broadcasting Co. v. Dept. of Revenue, 287 Or 35, 597 P2d 795 (1979)

If the highest and best use of land as vacant and available reduced value of existing improve­ments so that total value of land and improve­ment is less than value of existing improve­ments and their corresponding current land use value, then prop­erty should be valued at its existing use. Oregon Broadcasting Co. v. Dept. of Rev., 287 Or 267, 598 P2d 689 (1979)

While land and improve­ments are to be valued separately, when both are at issue, they should be valued so that together they constitute highest and best use of prop­erty as a whole. Oregon Broadcasting Co. v. Dept. of Rev., 287 Or 267, 598 P2d 689 (1979)

Mandate of this sec­tion that if prop­erty has no immediate market value true cash value is amount of money that justly compensates owner for loss of prop­erty was not followed when single fixed value was applied to wells and septic systems in face of uncontroverted testimony revealing that costs could vary depending on condi­tions. McConoughey v. Dept. of Rev., 10 OTR 125 (1985)

Where court found highest and best use of subject prop­erty was its current use and there were little usable sales and income data, court gave most weight to cost approach in finding true cash value of prop­erty. Freedom Fed. Savings and Loan v. Dept. of Rev., 11 OTR 317 (1989), aff'd 310 Or 723, 801 P2d 809 (1990); STC Submarine, Inc. v. Dept. of Rev., 13 OTR 14 (1994), aff'd 320 Or 589, 890 P2d 1370 (1995)

Appraisal made for purposes of financing or obtaining loan is not evidence of true cash value, rather, test of true cash value is value in exchange. Skerritt v. Dept. of Rev., 12 OTR 65 (1991)

Offers to purchase condi­tioned upon obtaining condi­tional use permit to build were persuasive evidence of true case value. Hines v. Dept. of Rev., 12 OTR 78 (1991)

Test of highest and best use is not mechanical applica­tion of whether use is physically possible, legally permissible, financially feasible and maximally productive, but each of those condi­tions must be related to market condi­tions and where use made is more intensive than market, true cash value must be determined based on market's probable use of prop­erty at economic rent. Fred Meyer, Inc. v. Dept. of Rev., 12 OTR 85 (1991)

Where improve­ments to land were inconsistent with highest and best use of land for agriculture and grazing, cost of improve­ments was improperly considered in determining true cash value of land. Connecticut General Life Ins. Co. v. Dept. of Rev., 12 OTR 461 (1993)

Factors Affecting Value

The purpose of ORS 308.345 to 308.395 is to defeat effect on bona fide farmer of increased assess­ments growing out of highest and best use require­ment. Hulburt v. Dept. of Rev., 4 OTR 475 (1971)

In the valua­tion of a "going concern," the market to be used is that of the operator of a going concern rather than for a sale on liquida­tion. Avison Lbr. Co. v. Dept. of Rev., 5 OTR 45 (1972)

Real prop­erty (golf course) could be restricted to open use, operated as a loss and still have market value if there was possibility of profitable opera­tion in foreseeable future. Willamette Factors v. Depart­ment of Revenue, 8 OTR 400 (1980), aff'd 291 Or 568, 633 P2d 781 (1981)

Federal and state invest­ment and energy income tax credits, partially available to sub­se­quent purchaser of subject prop­erty, had direct influence on market value as of assess­ment date. Joseph Hydro Associates, Ltd. v. Dept. of Rev., 10 OTR 277 (1986)

Fact that plaintiff is federal govern­ment and able to avoid certain market expenses, such as construc­tion insurance, is not relevant for purposes of es­tab­lishing fair market value. General Services Adm. v. Dept. of Rev., 10 OTR 290 (1986)

Provision of this sec­tion es­tab­lishing different tax valua­tion for four or more lots held by same owner within same subdivision violates Article I, sec­tion 32 of Oregon Constitu­tion by es­tab­lishing classifica­tion of prop­erty for purpose of taxa­tion that is not based on inherent, qualitative, genuine and ra­tional differences between classes of prop­erty. Mathias v. Dept. of Revenue, 11 OTR 347 (1990), aff'd 312 Or 50, 187 P2d 272 (1991)

Market value adjust­ment to reflect legal restric­tion on prop­erty use applies whether restric­tion was incurred voluntarily or involuntarily. Bayridge Assoc. Ltd. Partnership v. Dept. of Rev., 13 OTR 24 (1994), aff'd 321 Or 21, 892 P2d 1002 (1995)

Whether compensa­tion for govern­ment restric­tions on prop­erty is part of prop­erty's market value depends on whether compensa­tion is transferable to sub­se­quent purchasers of prop­erty. Bayridge Assoc. Ltd. Partnership v. Dept. of Rev., 13 OTR 24 (1994)

Where financial feasibility of develop­ment is unknown, market will attribute some value to possibility of develop­ment. Sells v. Dept. of Rev., 13 OTR 179 (1994)

Where tax lot is divided into more than one assess­ment account, proper pro­ce­dure is to determine value of tax lot as whole, then allocate por­tion of total tax lot value to each assess­ment account. Tanner v. Dept. of Revenue, 13 OTR 393 (1995)

Determina­tion of value of prop­erty as it exists on assess­ment date does not preclude reduc­tion in assessed value based on changes occurring during tax year. Shatzer v. Dept. of Revenue, 13 OTR 436 (1996), aff'd 325 Or 211, 934 P2d 1119 (1997)

Where highest and best use of parcel is as part of joint develop­ment with adjoining parcels under common ownership, parcels may be valued as single economic unit. White v. Washington County Assessor, 17 OTR 45 (2003)

Under public interest rule for valuing prop­erty subject to govern­mental restric­tions, value of prop­erty without regard to restric­tions minus value of govern­ment interest yields value of taxable private interest in prop­erty. Wilsonville Heights Assoc., Ltd. v. Dept. of Revenue, 17 OTR 139 (2003), aff'd 339 Or 462, 122 P3d 499 (2005)

In adjusting value of affordable housing project, value of govern­ment credit support is equivalent to present value of rent lost by prop­erty owner due to govern­mental restric­tions. Wilsonville Heights Assoc., Ltd. v. Dept. of Revenue, 17 OTR 139 (2003), aff'd 339 Or 462, 122 P3d 499 (2005)

Govern­mental restric­tion that condi­tions use of prop­erty without prohibiting all beneficial use does not render prop­erty completely without taxable value. Poddar v. Dept. of Revenue, 341 Or 186, 139 P3d 962 (2006)

Methods of Valua­tion

In absence of direct evidence of value which can be used for market data approach, income or capitaliza­tion approach may be used when income attributable to the prop­erty can be segregated with reasonable certainty. Houghton v. Dept. of Rev., 4 OTR 451 (1971), aff'd 261 Or 564, 495 P2d 715 (1972)

Capitaliza­tion of income was proper method of determining true cash value. Houghton v. Dept. of Rev., 4 OTR 451 (1971), aff'd 261 Or 564, 495 P2d 715 (1972)

Rule-making power given depart­ment does not empower it to disqualify a pro­ce­dure which patently should result in a determina­tion of true cash value. La Pointe's, Inc. v. Dept. of Rev., 4 OTR 512 (1971)

If improve­ments on the land would produce income for a buyer purchasing the land for its highest and best use, it is appropriate to add to the value of the land the value attributable to the rental income from the improve­ments. Nepom v. Dept. of Rev., 264 Or 195, 504 P2d 1039 (1972)

In the valua­tion of an operating sawmill, the "cost approach is the proper method to be used." Avison Lbr. Co. v. Dept. of Rev., 5 OTR 45 (1972)

Where in­for­ma­­tion necessary to an evalua­tion based on the income approach is not available, the cost approach to market value is the proper appraisal method. Shields v. Dept. of Rev., 266 Or 461, 513 P2d 784 (1973)

If sale of prop­erty is recent, voluntary, arm's length transac­tion between buyer and seller, both of whom are knowledgeable and willing, sales price, while not conclusive, is very persuasive of market value. Kem v. Dept. of Rev., 267 Or 111, 514 P2d 1335 (1973); Rhodes v. Dept. of Rev., 12 OTR 24 (1991)

If market exists, prop­erty should be valued by using market data approach. Kem v. Dept. of Rev., 267 Or 111, 514 P2d 1335 (1973)

Principles governing use of dealings in prop­erty itself to show its value apply equally to transac­tions before and after valua­tion date. Sabin v. Dept. of Rev., 270 Or 422, 528 P2d 69 (1974)

Hypothetical subdivision for assess­ment purposes is proper when evidence indicates that such division is necessary to effectuate highest and best use. Sabin v. Dept. of Rev., 270 Or 422, 528 P2d 69 (1974)

Although not conclusive, price paid at time of assess­ment is one of best and most satisfactory standards for estima­tion of actual value, unless special circumstances or comparable transac­tions indicate it to be out of line with other market data ma­te­ri­al. Equity Land Resources, Inc. v. Dept. of Rev., 268 Or 410, 521 P2d 324 (1974)

The value of a specialized building having no immediate value may be assessed at its replace­ment cost, less deprecia­tion. Benevolent Protective Order of Elks, Lodge 1680 v. Dept. of Rev., 6 OTR 488 (1976)

If an active market for used machinery and equip­ment exists, those costs, and not new costs less deprecia­tion, are to be used to es­tab­lish true cash value. Lamers v. Dept. of Rev., 8 OTR 106 (1979)

Where residence had been on market for years at price lower than assessed valua­tion, true cash value was "amount of money that would justly compensate owner for loss of prop­erty," with bona fide listing price as upper limit. Martin v. Dept. of Rev., 8 OTR 141 (1979)

Where there was abundance of economic data in record from comparable buildings, income approach to valua­tion of medical office building was appropriate despite newness of construc­tion. Portland Adventist Hospital v. Dept. of Rev., 8 OTR 342 (1980)

Separate assess­ment of unique commercial tenant improve­ments using cost basis was inappropriate absent evidence that capitaliza­tion of rent did not reflect improve­ment value. Bylund v. Dept. of Revenue, 9 OTR 4 (1981), aff'd 292 Or 582, 641 P2d 577 (1982)

Since former versions of ORS 215.203 (Zoning ordinances establishing exclusive farm use zones) and 215.213 (Uses permitted in exclusive farm use zones in counties that adopted marginal lands system prior to 1993) provided that dwellings provided in conjunc­tion with farm use were nonfarm uses, half-acre homesite on 111 acre parcel zoned Exclusive Farm Use was properly valued as homesite rather than farmland. Chapin v. Dept. of Revenue, 290 Or 931, 627 P2d 480 (1981)

In assessing bare forest land for purpose of ad valorem taxa­tion, Depart­ment of Revenue's utiliza­tion of "abstrac­tion" approach to es­tab­lishing market value was appropriate, however Depart­ment erred in failing to give considera­tion to prepurchase valua­tion of merchantable timber by knowledgeable parties to sales transac­tions of timber land in area. Publishers Paper v. Dept. of Rev., 292 Or 836, 644 P2d 1089 (1982)

Where taxpayers owned buildings but not land beneath them, best measure of market value was depreciated cost of buildings, because until landowners take ac­tion to terminate taxpayers' use of land, taxpayers have full use of buildings. Cove Sportmans Club v. Dept. of Rev., 11 OTR 40 (1988)

When taken in context of other relevant statutes, this sec­tion re­quired true cash value of each tax lot in fully developed subdivision to be assessed by itself, not as por­tion of larger piece of prop­erty. First Interstate Bank v. Dept. of Revenue, 306 Or 450, 760 P2d 880 (1988)

Where prop­erty is under nonconforming use under nontransferable, limited, revocable use permit, prop­erty is unmarketable as it exists and must be valued under this sec­tion at amount that would justly compensate owner for its loss; under this method of value, it is appropriate to use actual rent rather than estimated market rent because loss to owner would be actual rent. Wy'East Color, Inc. v. Dept. of Rev., 12 OTR 102 (1991)

In appraising self-storage facility, appraiser should use data and methods market uses. Mikkelson v. Dept. of Rev., 12 OTR 111 (1991)

Where uniqueness of prop­erty made tradi­tional valua­tion difficult, sale of highly publicized prop­erty within a few months of assess­ment date was best indicator of value. Ernst Brothers Corp. v. Dept. of Rev., 12 OTR 527 (1993), aff'd 320 Or 294, 882 P2d 591 (1994)

Income approach was improper where income attributable to taxable tangible prop­erty could not be distinguished from income attributable to nontaxable business opera­tion. Lincoln County v. Dept. of Rev., 12 OTR 548 (1993)

Real market value of per­sonal rental prop­erty is taxpayer's cost of obtaining prop­erty, not sales price upon disposi­tion. H-P Ventures, Inc. v. Dept. of Rev., 13 OTR 330 (1995)

Where prop­erty improve­ment is partially completed, improve­ment value is based on sum of improve­ment component values determined by percentage comple­tion for each component, not percentage comple­tion for improve­ment as whole. Watkins v. Dept. of Revenue, 14 OTR 227 (1997)

Use of different calcula­tion methods to determine real market value of various prop­erty types does not violate Oregon constitu­tional require­ment for uniformity of assess­ment or require­ment for equal treat­ment of citizens. Brummell v. Dept. of Revenue, 14 OTR 303 (1998)

For purposes of valuing private interest in prop­erty subject to govern­mental restric­tions, capitaliza­tion rate must be based on estimated terms and returns necessary to attract debt and equity capital from general market sources on date of assess­ment. Wilsonville Heights Assoc., Ltd. v. Dept. of Revenue, 17 OTR 139 (2003), aff'd 339 Or 462, 122 P3d 499 (2005)

Completed Cita­tions

Oak Acres Mobile Homes Park, Inc. v. Dept. of Rev., 4 OTR 340 (1971), aff'd 260 Or 562, 491 P2d 620 (1971); J. R. Widmer, Inc. v. Dept. of Rev., 4 OTR 361 (1971), aff'd 261 Or 371, 494 P2d 854 (1972)

Law Review Cita­tions

59 OLR 124 (1980)

Chapter 308

Notes of Decisions

Programs administered by Depart­ment of Revenue that allow preferential assess­ment for farm and forestland are not "programs affecting land use" and are not subject to require­ment of statewide goal and local comprehensive plan compliance under ORS 197.180 (State agency planning responsibilities). Springer v. LCDC, 111 Or App 262, 826 P2d 54 (1992), Sup Ct review denied

Atty. Gen. Opinions

Applica­tion of Article XI, sec­tion 11b of Oregon Constitu­tion to this chapter, (1990) Vol 46, p 388

Law Review Cita­tions

5 EL 516 (1975)

1 Legislative Counsel Committee, CHAPTER 308—Assessment of Property for Taxation, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­308.­html (2007) (last ac­cessed Feb. 12, 2009).
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2007, Chapter 308, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­308ano.­htm (2007) (last ac­cessed Feb. 12, 2009).
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.