The Washoe County Assessor’s Office provides a valuation of each property (land and structure) every year for taxing purposes. Here’s an overview of how it is calculated:
Step 1 — Property Value Assessment
To understand property tax, it’s important to know how your property is assessed. The formula used to calculate your assessed value is shown below.
Formula: Land Value (Market Value) + Improvement Value (Replacement Value - Depreciation) = Taxable Value x Assessment Rate (35%) = Assessed Value
Key Concepts
- Land Value: Land value is equal to the full cash value (market value) of the parcel.
- Improvement Value: Replacement value minus depreciation.
- Replacement Value: The current cost to completely rebuild the structures.
- Depreciation: Deduction of 1.5 percent from replacement value for each year up to 50 years.
- Taxable Value: Land Value plus improvement value.
- Assessment Rate: 35 percent of taxable value set by state law in Nevada.
Step 2 — Property Tax Rates
Your property tax rate is based on where you live. For example, Reno’s rate is $3.66 for every $100 of assessed value. In Step 2, this local property tax rate becomes a key factor in calculating your assessed taxes.
Formula: Assessed Value x Tax Rate Per $100 AV (3.66) = Assessed Taxes.
Key Concepts
Property Tax Rate: The total tax rates for each taxing entity are typically comprised of smaller component rates. These components generate revenue for specific uses, such as general operations, debt service for capital projects, public safety, road improvements and many other public services.
Step 3 — Property Tax Abatements
Property tax abatements directly affect how much you pay in property taxes. In Nevada, tax caps limit how much your bill can go up each year. To determine your final bill due, any abated taxes are subtracted from the total owed.
Formula: Assessed Taxes - Abated Taxes = Billed Taxes Due
Key Concepts
Tax Caps: In 2005, the Nevada Legislature enacted property tax caps that can partially abate property taxes paid by property owners.
The maximum annual cap factors are:
- Residential Cap – 3 percent for owner-occupied residential properties and qualifying rental properties
- General Cap – 8 percent for all other property types
Abated Taxes: Under the tax cap system, taxes paid on each property cannot rise more than the cap factor for that year.
($235K Property Value)
$3,000
(3% Cap)
$3,090
(5% AV Growth)
$3,150
$60
$3,090
What Makes Nevada Different?
Nevada’s property tax rules are unique. Property values are reduced by depreciation for up to 50 years and do not reset at sale, creating long-term funding challenges for local governments to provide critical services. This creates a system where older homes may pay significantly less in property taxes, but there is no evidence that they demand fewer public services.
- Depreciation Rule: Nevada is the only state in the nation that applies depreciation to residential property. A home’s replacement value is reduced by 1.5% each year for up to 50 years, gradually eroding the property tax base over time.
- No Reset for Property Values: When a property is sold, its taxable value is not reset to reflect its market value. Instead, the new owner inherits the previous owner’s taxable value, which can only increase within the capped limits annually. Over time, this creates a widening gap between market value and taxable value.
Nevada 1 of 50
States that applies a depreciation factor to residential buildings
Cap Limits
Nevada limits property taxes in two ways: first, by capping how much property taxes can increase each year, and second, by capping the maximum tax rate that local jurisdictions can charge.
- Limits on Annual Increases: Property tax increases are capped at 3% for owner-occupied residential properties and certain rental properties. The cap is 8% for all other properties. While these caps protect property owners from sudden tax hikes, they also limit revenue growth and make it difficult for City services to keep pace with rising costs and a growing community’s needs.
- Limits on Tax Rates: In Reno, the total property tax rate is $3.66 per $100 of assessed value, which is the maximum allowed by state law. This rate cannot be increased unless the Legislature approves a change.
Other Factors
Exemptions
- Partial exemptions: Certain homeowners (veterans, disabled veterans, blind residents, surviving spouses) can reduce their bill.
- Full exemptions: Government, nonprofits, charities, and religious organizations pay no property taxes.
State Abatement Programs
In Nevada, authority to grant company tax abatements rests solely with two state agencies. Local governments have no discretion in approving abatements or establishing eligibility criteria.
- Economic Development: The State of Nevada, through the Governor’s Office of Economic Development (GOED), offers tax abatement programs for qualifying companies that invest in economic diversification, job creation, and targeted industries. For more information on GOED abatements please see staff’s memo to the Mayor and City Council.
- Energy: The State of Nevada, through the Governor’s Office of Energy, offers tax abatement programs for qualifying companies engaged in green building, renewable energy projects, or the use of recycled materials.
Property tax is a major revenue source for Nevada’s local governments—often the first or second-largest funding source depending on the jurisdiction. For the City of Reno, property tax is the second largest General Fund revenue source and largest Street Fund revenue source.
This means that property tax helps fund nearly every service the City of Reno provides. These services include:
- Police and Fire Services
- 911 Dispatch
- Parks and Recreation Facilities & Programs
- Municipal Court and City Attorney
- Code Enforcement
- Planning Review
- Business Licensing
- Maintenance of City Facilities
- General Government Support Services
- City Streets and Maintenance
Property Tax Scenarios
The hypothetical example below shows four houses in Reno, each worth $600,000, but ranging in age from brand-new (0 years old) to 30 years old. It highlights how depreciation lowers the taxable value of older homes, which in turn reduces their property tax bills. It also demonstrates how property tax bills are calculated.
| Taxes Due Calculation | House A |
House B |
House C |
House D |
|---|---|---|---|---|
| Year Built / Age | 2024 / 0 years | 2014 / 10 years | 2004 / 20 years | 1994 / 30 years |
| Property Value | $600,000 | $600,000 | $600,000 | $600,000 |
| Depreciation | -$0 | -$67,500 | -$135,000 | -$202,500 |
| Taxable Value | $600,000 | $532,500 | $465,000 | $397,500 |
| Assessed Value | $210,000 | $186,400 | $162,800 | $139,100 |
| Assessed Taxes | $7,690 | $6,820 | $5,960 | $5,090 |
| Abated Taxes | -$1,460 | -$1,570 | -$1,190 | -$1,220 |
| Property Taxes Due | $6,230 | $5,250 | $4,770 | $3,870 |
- Property Value: Assumes land value is equal to 25% ($150K) of property value and replacement value is equal to 75% ($450K) of property value.
- Depreciation: Replacement value [$450K] x (home age x 1.5% depreciation factor).
- Assessed Value: 35% of the taxable value.
- Assessed Taxes: Assessed value x tax rate [3.66 per $100 (or 3.66%) in Reno].
- Abated Taxes: Assessed taxes - tax cap.