Property Taxes and Flood Damage

Ducks swim amid a flooded unharvested corn field whose value as farmable land will be reduced this year. (Photo by Laura Thompson)

Property Taxes and Flood Damage April 23, 2019

Under Nebraska law, land and buildings are valued for property tax purposes on January 1 of each year. There are no statutory provisions for changing that property valuation due to property damage, although some county assessors have done so in the past.

Nebraska state senators have approved an amendment that would establish a process for reducing land and building values damaged by natural disaster. Legislative Bill 512 was amended on first reading to include a process where property values would be prorated when the property was damaged by natural disaster before October 1 of any year. The property would be valued in its original undamaged state, in its damaged state, and in its restored/replaced state.

Let’s look at an example of how this would work. Fred Flintstone owns Nebraska farmland valued at $2,000/acre on January 1, 2019. Fred’s land is damaged May 1 and its damaged value is $800/acre. Fred is unable to reclaim or restore his land by the end of the year.

The adjusted property value of Fred’s damaged land for 2019 would be (4/12 x $2000/acre for the first four months) + (8/12 x $800/acre for the last eight months) or $1203/acre. Fred’s 2020 property tax payments would be around 40% below what they would have been if no natural disaster had occurred. Remember that in Nebraska the property taxes we pay in the spring and fall of 2019 are the 2018 property taxes, so 2019 property taxes won’t be paid until spring and fall of 2020.

LB 512 has passed the first reading and has two rounds of legislative debate left. The damaged property assessment provisions may be modified at the next round of legislative debate. I expect LB 512 will be enacted by the Unicameral and signed by the Governor, but time will tell.