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Taxes, Fees on Accessory Dwelling Units (ADUs) Eased in Portland



At a time when Portland grapples with a shortage in housing, two new regulatory changes may bring many more accessory dwelling units (ADUs)—small apartment units like basements and small backyard houses added to single-family homes—to the city, thereby helping to increase the housing stock.

According to the Portland Tribune, an "unusually high property tax" leveled by Multnomah County on homeowners who add ADUs to their homes has been lifted after new regulatory action by the State:

The county abandoned its latest ADU tax policy after the Oregon Department of Revenue circulated a draft new state regulation in late-April. That clearly states that allowing homeowners to build ADUs on their lots, as Portland has done to promote construction, doesn’t constitute a zone change — the rationale Multnomah County Assessor Randy Walruff used initially to double, triple and even quadruple the property taxes of 103 new ADU owners last fall. Under the Measure 50 property tax limitation enshrined by voters into the Oregon Constitution in 1997, a zone change is one of a handful of exceptions that allow assessors to raise property taxes more than the 3 percent annual cap.

Walruff reduced those property taxes soon after sending November tax statements in response to complaints, but he still raised taxes on the land held by ADU owners. Now he's abandoning those tax increases as well and reverting to the county's old tax policy, which charges owners based on the value of their new construction.

In addition, the Portland Business Journal reports that the Portland City Council voted to extend a fee waiver program for ADUs through July 2018, saving builders of ADUs between $12,000 and $20,000.

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