Vehicle owners could see higher tax bills
Commissioner of the Revenue Naisha Carter said vehicle owners in Charlotte County could see increases in their personal property tax bills this December.
This is not due to a tax rate increase or reduction in tax relief but rather to increases in used vehicle values.
“The value increase will most likely affect newer model vehicles more so than older vehicles, with the largest jump in passenger trucks and SUV values.,” Carter said. “The demand for these was great, but the supply was inadequate. As a result, some citizens of the county may pay more in personal property taxes this year.”
While some citizens in neighboring counties will see higher tax bills in June, Carter said that Charlotte County does not assesses vehicle values until July 1. “So, our citizens may see increases on their bills that are due December 5.” Cater said.
According to Carter, her office uses the clean trade-in value established by the National Automobile Dealers Association (NADA) as fair market value.
“The commissioner’s office will adjust for vehicles exceeding the mileage indicated in the pricing guide,” Carter said.
It is believed the COVID-19 pandemic caused the rise.
Historically, vehicle values tend to depreciate from month to month. As such, the predicted value of any vehicle would be lower than the value of that exact vehicle the previous January. In early 2020, vehicle values were trending as the industry customarily expected.
In March, COVID-19 altered the anticipated trends of the automobile industry. As a result, all major vehicle valuation services, not just NADA, indicated increased market values between January 2020 and January 2021.
In the summer of 2020, prices increased over 10% for the US used car market as a whole.
According to Carter, several factors contributed to the trends.
In March of 2020, the Federal Reserve cut the interest rates to near zero. On both new and preowned vehicles, these unprecedented low interest rates allowed consumers to purchase vehicles sooner than they would have in the past.
COVID-19 related closing of certain auto manufacturing plants for the necessary production of ventilators and other personal protective equipment caused a further reduction in inventory.
Also, large fleet companies like rental agencies and car services choose not to replace their inventory, leaving the market with fewer preowned vehicles.
Cars.com data shows new-car inventory dropped more than 15% between February and April of 2020.
When new vehicle prices rise, and inventory falls, shoppers opt for used cars. Consequently, the used-car stock declined, and prices skyrocketed as well.