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This is the single most misunderstood thing about buying a home in Oregon — and getting it right can be worth tens of thousands of dollars over a retirement. If you’re coming from California or almost anywhere else, throw out your assumptions about how property tax works.
In most states, when you buy a home, the county reassesses it at your purchase price, and your property tax is calculated on that new value. Buy a $480,000 home, get taxed on $480,000. Oregon does not work this way. Thanks to two 1990s ballot measures — Measure 5 and especially Measure 50 — your tax is based on the home’s Maximum Assessed Value (MAV), a separate, capped number that has nothing to do with what you just paid.
Every Oregon property has two values: its Real Market Value (RMV, roughly what it would sell for) and its Maximum Assessed Value (MAV). Your taxes are calculated on the lower of the two. The key rule: the MAV can grow no more than 3% per year, regardless of how fast the market value rises. It was originally set in 1997 at the home’s 1995 value minus 10%, and it has crept up at most 3% annually ever since.
The critical part for buyers: the MAV does not reset to your purchase price when the home changes hands. Whatever capped assessed value the home carried, it keeps carrying after you buy it (with only the normal 3% annual step-up). You inherit the previous owner’s low assessed value. This is the opposite of California’s Proposition 13, where the clock resets to the new sale price on every purchase.
Because market values have risen far faster than 3% a year in much of Oregon, most homes’ real market value has pulled well above their capped MAV. That gap is informally called compression. The bigger the gap, the more your tax bill undershoots what you’d pay if it were based on market value. An older home that’s been around since the MAV was set in 1997 can have a market value double its assessed value — and you’re taxed on the lower number.
| Two homes, same $450,000 market value | Older resale | New build |
|---|---|---|
| Real Market Value | $450,000 | $450,000 |
| Maximum Assessed Value | ~$300,000 | ~$430,000 |
| Taxed on (lower of the two) | $300,000 | $430,000 |
| Tax at ~0.9% effective | ~$2,700 | ~$3,870 |
Same home value, same neighborhood — but the older resale’s built-up compression saves roughly $1,170 a year, every year, growing with the cap. Over a decade that’s well over $13,000. That’s why an older Summerfield or King City home can be cheaper to own than a comparable new build despite identical market prices.
New homes like those at Eden Gleann get their MAV set close to market value when they’re built (using a ratio for comparable new property), so they start with little or no compression. The 3% cap still protects you going forward — your assessed value can’t balloon — but you don’t inherit decades of built-up gap the way an older resale buyer does. It’s not a reason to avoid new construction; it’s a reason to expect a higher initial tax line and to factor it into your comparison.
Three practical rules. First, never estimate property tax from the asking price — pull the home’s actual assessed value from the county assessor. Second, when comparing two homes, compare their assessed values, not just their prices; the one with more compression is cheaper to hold. Third, remember the cap protects you after purchase too — your tax can’t jump just because the market did. See how this plays into each community’s numbers on the county tax guide.
Send us a listing and we’ll pull its assessed value and compression gap so you know the real tax before you offer.
Check a home’s real taxEducational summary, not tax advice. Effective rates and assessed-value mechanics vary by property and tax district; verify with the county assessor. Figures are illustrative.