Newmark PCG

June 8, 2021

Nevada property taxes are calculated through a unique methodology based on the replacement cost of the property and not on market value. In California, property taxes are reassessed to market value upon the sale of a property. However, Nevada property taxes carry over from the previous owner upon sale, and a tax cap limits annual increases. Since many of our clients acquire assets in Nevada, this article explains how to calculate property taxes in Nevada when underwriting a deal and how the Newmark Property Tax Group can help appeal taxes.

Every year in May, the state government determines the property tax requirement to meet the budget and releases the information to the Counties. The Counties then provide tax rates for each tax area in their jurisdiction in June.

If you want to know the Tax Rate for an area in Clark County, then click here. Additionally, visit click here for future Clark County property tax due dates.

Woman calculating Nevada property taxes
Nevada has a unique methodology to calculate property taxes based on the replacement cost of the property and not on market value.

Step-by-Step Guide

  1. The value of land is determined by the government through market sales and other standard appraisal methods
  2. Add the replacement cost of the current improvements at today’s construction costs
  3. Subtract annual depreciation of 1.5% per year for up to 50 years (the depreciation schedule does not reset with a transfer of ownership)

You now have calculated your taxable value, but recent laws further change the tax payment.

  1. Calculate 35% of your taxable value to find your assessed value
  2. Multiply the assessed value by the local tax rate as determined by the State and County, which cannot be more than 3.64% plus the $0.02 per $100 of assessed value for the protection and preservation of wildlife
  3. Finally, regardless of the current ownership or a transfer of ownership, the property tax bill cannot be 3% higher for primary residences or 8% higher for all other properties

You now have calculated your taxable value, but recent laws further change the tax payment.

  1. Calculate 35% of your taxable value to find your assessed value
  2. Multiply the assessed value by the local tax rate as determined by the State and County, which cannot be more than 3.64% plus the $0.02 per $100 of assessed value for the protection and preservation of wildlife
  3. Finally, regardless of the current ownership or a transfer of ownership, the property tax bill cannot be 3% higher for primary residences or 8% higher for all other properties

Property Tax Example

For example, here is a hypothetical property tax calculation for an office building following the steps outlined above.

First, find the taxable value. Let’s assume there is an office building in Las Vegas on an acre of land, and the government determines that the land value is $50 per square foot, which would be $2,178,000 full cash value. Let’s assume that the replacement cost for the improvements on the land, the office building, is $5,000,000 this year. The office building finished construction ten years ago; therefore, the property has $750,000 in depreciation at 1.5% per year for ten years. The taxable value is the full cash value of the land, plus the replacement of improvements, and minus the depreciation across ownership, which is $6,428,000.

Next, find the assessed value, which is thirty-five percent of $6,428,000 or $2,249,800. Multiply the assessed value by the tax rate, which is 3.2782% in Las Vegas City in 2020-2021. Therefore, the 2020-2021 taxes for this office building are $73,752.94. Finally, compare this tax bill with the previous tax bill. This bill cannot be larger than 8% of the previous bill.

How to Appeal Nevada Property Taxes

Assessment appeals must be filed with the County Board of Equalization by January 15th. The best candidates for appeal are properties that recently completed construction, changed use, underwent a mandatory 5-year reappraisal, or a combination of these factors. Property tax appeals in Nevada are through the county and state boards of equalization and the state court system. The Newmark Property Tax Group specializes in appealing property taxes, so reach out with any questions.

Timeline of Nevada Property Tax Laws

The table below is a timeline of state laws and public votes that have affected the entire state’s property tax system.

2005AB 439Set a cap on annual increases in Nevada property taxes: 3% for primary residences and 8% for all other property types
2002Question 1
(Page 17)
The $3.64 per $100 of assessed value from the 1979 law was changed to an effective rate of $3.66 per $100 due to a two-cent levy to pay for the protection and preservation of natural resources
1981SB 69Changed the basis of Nevada property taxes from full cash value (market value) to taxable value, which is the market value of the land plus the replacement cost of improvements
1979SB 204Set a cap on Nevada property taxes at $3.64 per $100 of assessed value
1978Question 6Mimicked California’s property tax cap at 1% of the tax base and 2% annual increases (but the bill allows the Legislature to make changes)
1963AB 168Set the assessed value equal to 35% of full cash value (market value)
PreviousArticle 10, Section 2
Nevada Constitution
There is a property tax cap in the Nevada State Constitution of $5 per $100 of assessed value

Definitions

Full Cash Value: An estimation of market value if the property sold today, which is the basis for the land value calculation by the assessor’s office

Taxable Value: Vacant land is full cash value; improvements are replacement cost less depreciation

Assessed Value: 35% of taxable value

Disclaimer: The information contained in this article is provided for general informational purposes only, and should not be considered or treated as legal or tax advice and represents only general information that may or may not be applicable to the reader’s particular situation. The reader should consult its own attorney and/or tax advisor if specific guidance, information, or advise is required.

About the Author(s)

Mark Schuessler is a Managing Director with the Newmark Private Capital Group and has closed more than 80 sales transactions with a total volume in excess of $1.5 billion. Mike Diaz is a Managing Director based in the firm’s Irvine, CA office, Mr. Diaz brings to his position over 15 years of experience assisting clients in all phases of the property tax cycle.