ORS 308.205
Real market value defined

  • rules


Real market value of all property, real and personal, means the amount in cash that could reasonably be expected to be paid by an informed buyer to an informed seller, each acting without compulsion in an arm’s-length transaction occurring as of the assessment date for the tax year.


Real market value in all cases shall be determined by methods and procedures in accordance with rules adopted by the Department of Revenue and in accordance with the following:


The amount a typical seller would accept or the amount a typical buyer would offer that could reasonably be expected by a seller of property.


An amount in cash shall be considered the equivalent of a financing method that is typical for a property.


If the property has no immediate market value, its real market value is the amount of money that would justly compensate the owner for loss of the property.


If the property is subject to governmental restriction as to use on the assessment date under applicable law or regulation, real market value shall not be based upon sales that reflect for the property a value that the property would have if the use of the property were not subject to the restriction unless adjustments in value are made reflecting the effect of the restrictions. [Amended by 1953 c.701 §2; 1955 c.691 §§1, 2; 1977 c.423 §2; 1981 c.804 §34; 1989 c.796 §30; 1991 c.459 §88; 1993 c.19 §6; 1997 c.541 §152]

Source: Section 308.205 — Real market value defined; rules, https://www.­oregonlegislature.­gov/bills_laws/ors/ors308.­html.

Notes of Decisions

True cash value

Book value is not, as matter of law, true cash value. La Pointe’s, Inc. v. Dept. of Rev., 4 OTR 512 (1971)

Without a valid foundation for different assessments, the assessment of part of the land of a shopping center at a dollar rate per square foot different from the remaining land of the center is a violation of the uniformity clauses of the Ore. Const. Henshaw v. Dept. of Rev., 5 OTR 263 (1973)

In reaching determination of true cash value of “super-custom built home” appraisers for both parties properly recognized that overbuilding is type of obsolescence which must be considered in determining value of property for assessment purposes. Fritz v. Dept. of Rev., 7 OTR 375 (1978)

Where property was listed for sale at price of $230,000 but evidence was clear that nothing came of the listing in spite of market activity, such listing price was not evidential of market value. Tannler v. Dept. of Rev., 7 OTR 392 (1978)

Goal of appraisal process is to determine property’s true cash value, which is its market value as of assessment date. Bylund v. Dept. of Rev., 7 OTR 532 (1978)

Evidence showed that on facts of case income approach yielded better measure of property’s true cash value than cost approach, but because this approach resulted in higher value than that pled by Department of Revenue decree was modified to conform to pleadings. Brooks Resources Corp. v. Dept. of Rev, 286 Or 499, 595 P2d 1388 (1979)

Enforcement of Revenue Department’s subpoena of cable television company’s income and expense records is proper where company can cite no rule or regulation, promulgated under this section, that would exclude from determination of true cash value consideration of income derived from operations. Southern Oregon Broadcasting Co. v. Dept. of Revenue, 287 Or 35, 597 P2d 795 (1979)

If the highest and best use of land as vacant and available reduced value of existing improvements so that total value of land and improvement is less than value of existing improvements and their corresponding current land use value, then property should be valued at its existing use. Oregon Broadcasting Co. v. Dept. of Rev., 287 Or 267, 598 P2d 689 (1979)

While land and improvements are to be valued separately, when both are at issue, they should be valued so that together they constitute highest and best use of property as a whole. Oregon Broadcasting Co. v. Dept. of Rev., 287 Or 267, 598 P2d 689 (1979)

Mandate of this section that if property has no immediate market value true cash value is amount of money that justly compensates owner for loss of property was not followed when single fixed value was applied to wells and septic systems in face of uncontroverted testimony revealing that costs could vary depending on conditions. McConoughey v. Dept. of Rev., 10 OTR 125 (1985)

Where court found highest and best use of subject property was its current use and there were little usable sales and income data, court gave most weight to cost approach in finding true cash value of property. Freedom Fed. Savings and Loan v. Dept. of Rev., 11 OTR 317 (1989), aff’d 310 Or 723, 801 P2d 809 (1990); STC Submarine, Inc. v. Dept. of Rev., 13 OTR 14 (1994), aff’d 320 Or 589, 890 P2d 1370 (1995)

Appraisal made for purposes of financing or obtaining loan is not evidence of true cash value, rather, test of true cash value is value in exchange. Skerritt v. Dept. of Rev., 12 OTR 65 (1991)

Offers to purchase conditioned upon obtaining conditional use permit to build were persuasive evidence of true case value. Hines v. Dept. of Rev., 12 OTR 78 (1991)

Test of highest and best use is not mechanical application of whether use is physically possible, legally permissible, financially feasible and maximally productive, but each of those conditions must be related to market conditions and where use made is more intensive than market, true cash value must be determined based on market’s probable use of property at economic rent. Fred Meyer, Inc. v. Dept. of Rev., 12 OTR 85 (1991)

Where improvements to land were inconsistent with highest and best use of land for agriculture and grazing, cost of improvements was improperly considered in determining true cash value of land. Connecticut General Life Ins. Co. v. Dept. of Rev., 12 OTR 461 (1993)

Factors affecting value

In the valuation of a “going concern,” the market to be used is that of the operator of a going concern rather than for a sale on liquidation. Avison Lbr. Co. v. Dept. of Rev., 5 OTR 45 (1972)

Real property (golf course) could be restricted to open use, operated as a loss and still have market value if there was possibility of profitable operation in foreseeable future. Willamette Factors v. Department of Revenue, 8 OTR 400 (1980), aff’d 291 Or 568, 633 P2d 781 (1981)

Federal and state investment and energy income tax credits, partially available to subsequent purchaser of subject property, had direct influence on market value as of assessment date. Joseph Hydro Associates, Ltd. v. Dept. of Rev., 10 OTR 277 (1986)

Fact that plaintiff is federal government and able to avoid certain market expenses, such as construction insurance, is not relevant for purposes of establishing fair market value. General Services Adm. v. Dept. of Rev., 10 OTR 290 (1986)

Provision of this section establishing different tax valuation for four or more lots held by same owner within same subdivision violates Article I, section 32 of Oregon Constitution by establishing classification of property for purpose of taxation that is not based on inherent, qualitative, genuine and rational differences between classes of property. Mathias v. Dept. of Revenue, 11 OTR 347 (1990), aff’d 312 Or 50, 187 P2d 272 (1991)

Market value adjustment to reflect legal restriction on property use applies whether restriction was incurred voluntarily or involuntarily. Bayridge Assoc. Ltd. Partnership v. Dept. of Rev., 13 OTR 24 (1994), aff’d 321 Or 21, 892 P2d 1002 (1995)

Whether compensation for government restrictions on property is part of property’s market value depends on whether compensation is transferable to subsequent purchasers of property. Bayridge Assoc. Ltd. Partnership v. Dept. of Rev., 13 OTR 24 (1994)

Where financial feasibility of development is unknown, market will attribute some value to possibility of development. Sells v. Dept. of Rev., 13 OTR 179 (1994)

Where tax lot is divided into more than one assessment account, proper procedure is to determine value of tax lot as whole, then allocate portion of total tax lot value to each assessment account. Tanner v. Dept. of Revenue, 13 OTR 393 (1995)

Determination of value of property as it exists on assessment date does not preclude reduction in assessed value based on changes occurring during tax year. Shatzer v. Dept. of Revenue, 13 OTR 436 (1996), aff’d 325 Or 211, 934 P2d 1119 (1997)

Where highest and best use of parcel is as part of joint development with adjoining parcels under common ownership, parcels may be valued as single economic unit. White v. Washington County Assessor, 17 OTR 45 (2003)

Under public interest rule for valuing property subject to governmental restrictions, value of property without regard to restrictions minus value of government interest yields value of taxable private interest in property. Wilsonville Heights Assoc., Ltd. v. Dept. of Revenue, 17 OTR 139 (2003), aff’d 339 Or 462, 122 P3d 499 (2005)

In adjusting value of affordable housing project, value of government credit support is equivalent to present value of rent lost by property owner due to governmental restrictions. Wilsonville Heights Assoc., Ltd. v. Dept. of Revenue, 17 OTR 139 (2003), aff’d 339 Or 462, 122 P3d 499 (2005)

Governmental restriction that conditions use of property without prohibiting all beneficial use does not render property completely without taxable value. Poddar v. Dept. of Revenue, 341 Or 186, 139 P3d 962 (2006)

Methods of valuation

In absence of direct evidence of value which can be used for market data approach, income or capitalization approach may be used when income attributable to the property can be segregated with reasonable certainty. Houghton v. Dept. of Rev., 4 OTR 451 (1971), aff’d 261 Or 564, 495 P2d 715 (1972)

Capitalization of income was proper method of determining true cash value. Houghton v. Dept. of Rev., 4 OTR 451 (1971), aff’d 261 Or 564, 495 P2d 715 (1972)

Rule-making power given department does not empower it to disqualify a procedure which patently should result in a determination of true cash value. La Pointe’s, Inc. v. Dept. of Rev., 4 OTR 512 (1971)

If improvements on the land would produce income for a buyer purchasing the land for its highest and best use, it is appropriate to add to the value of the land the value attributable to the rental income from the improvements. Nepom v. Dept. of Rev., 264 Or 195, 504 P2d 1039 (1972)

In the valuation of an operating sawmill, the “cost approach is the proper method to be used.” Avison Lbr. Co. v. Dept. of Rev., 5 OTR 45 (1972)

Where information necessary to an evaluation based on the income approach is not available, the cost approach to market value is the proper appraisal method. Shields v. Dept. of Rev., 266 Or 461, 513 P2d 784 (1973)

If sale of property is recent, voluntary, arm’s length transaction between buyer and seller, both of whom are knowledgeable and willing, sales price, while not conclusive, is very persuasive of market value. Kem v. Dept. of Rev., 267 Or 111, 514 P2d 1335 (1973); Rhodes v. Dept. of Rev., 12 OTR 24 (1991)

If market exists, property should be valued by using market data approach. Kem v. Dept. of Rev., 267 Or 111, 514 P2d 1335 (1973)

Principles governing use of dealings in property itself to show its value apply equally to transactions before and after valuation date. Sabin v. Dept. of Rev., 270 Or 422, 528 P2d 69 (1974)

Hypothetical subdivision for assessment purposes is proper when evidence indicates that such division is necessary to effectuate highest and best use. Sabin v. Dept. of Rev., 270 Or 422, 528 P2d 69 (1974)

Although not conclusive, price paid at time of assessment is one of best and most satisfactory standards for estimation of actual value, unless special circumstances or comparable transactions indicate it to be out of line with other market data material. Equity Land Resources, Inc. v. Dept. of Rev., 268 Or 410, 521 P2d 324 (1974)

The value of a specialized building having no immediate value may be assessed at its replacement cost, less depreciation. Benevolent Protective Order of Elks, Lodge 1680 v. Dept. of Rev., 6 OTR 488 (1976)

If an active market for used machinery and equipment exists, those costs, and not new costs less depreciation, are to be used to establish true cash value. Lamers v. Dept. of Rev., 8 OTR 106 (1979)

Where residence had been on market for years at price lower than assessed valuation, true cash value was “amount of money that would justly compensate owner for loss of property,” with bona fide listing price as upper limit. Martin v. Dept. of Rev., 8 OTR 141 (1979)

Where there was abundance of economic data in record from comparable buildings, income approach to valuation of medical office building was appropriate despite newness of construction. Portland Adventist Hospital v. Dept. of Rev., 8 OTR 342 (1980)

Separate assessment of unique commercial tenant improvements using cost basis was inappropriate absent evidence that capitalization of rent did not reflect improvement value. Bylund v. Dept. of Revenue, 9 OTR 4 (1981), aff’d 292 Or 582, 641 P2d 577 (1982)

Since former versions of ORS 215.203 and 215.213 provided that dwellings provided in conjunction with farm use were nonfarm uses, half-acre homesite on 111 acre parcel zoned Exclusive Farm Use was properly valued as homesite rather than farmland. Chapin v. Dept. of Revenue, 290 Or 931, 627 P2d 480 (1981)

In assessing bare forest land for purpose of ad valorem taxation, Department of Revenue’s utilization of “abstraction” approach to establishing market value was appropriate, however Department erred in failing to give consideration to prepurchase valuation of merchantable timber by knowledgeable parties to sales transactions of timber land in area. Publishers Paper v. Dept. of Rev., 292 Or 836, 644 P2d 1089 (1982)

Where taxpayers owned buildings but not land beneath them, best measure of market value was depreciated cost of buildings, because until landowners take action to terminate taxpayers’ use of land, taxpayers have full use of buildings. Cove Sportmans Club v. Dept. of Rev., 11 OTR 40 (1988)

When taken in context of other relevant statutes, this section required true cash value of each tax lot in fully developed subdivision to be assessed by itself, not as portion of larger piece of property. First Interstate Bank v. Dept. of Revenue, 306 Or 450, 760 P2d 880 (1988)

Where property is under nonconforming use under nontransferable, limited, revocable use permit, property is unmarketable as it exists and must be valued under this section at amount that would justly compensate owner for its loss; under this method of value, it is appropriate to use actual rent rather than estimated market rent because loss to owner would be actual rent. Wy’East Color, Inc. v. Dept. of Rev., 12 OTR 102 (1991)

In appraising self-storage facility, appraiser should use data and methods market uses. Mikkelson v. Dept. of Rev., 12 OTR 111 (1991)

Where uniqueness of property made traditional valuation difficult, sale of highly publicized property within a few months of assessment date was best indicator of value. Ernst Brothers Corp. v. Dept. of Rev., 12 OTR 527 (1993), aff’d 320 Or 294, 882 P2d 591 (1994)

Income approach was improper where income attributable to taxable tangible property could not be distinguished from income attributable to nontaxable business operation. Lincoln County v. Dept. of Rev., 12 OTR 548 (1993)

Real market value of personal rental property is taxpayer’s cost of obtaining property, not sales price upon disposition. H-P Ventures, Inc. v. Dept. of Rev., 13 OTR 330 (1995)

Where property improvement is partially completed, improvement value is based on sum of improvement component values determined by percentage completion for each component, not percentage completion for improvement as whole. Watkins v. Dept. of Revenue, 14 OTR 227 (1997)

Use of different calculation methods to determine real market value of various property types does not violate Oregon constitutional requirement for uniformity of assessment or requirement for equal treatment of citizens. Brummell v. Dept. of Revenue, 14 OTR 303 (1998)

For purposes of valuing private interest in property subject to governmental restrictions, capitalization rate must be based on estimated terms and returns necessary to attract debt and equity capital from general market sources on date of assessment. Wilsonville Heights Assoc., Ltd. v. Dept. of Revenue, 17 OTR 139 (2003), aff’d 339 Or 462, 122 P3d 499 (2005)

Where seller and buyer of property had same ownership and board of directors, sale was not “arm’s-length transaction” indicative of real market value. Grant County Assessor v. Hawkeye Mining Co., 19 OTR 382 (2007)

COMPLETED CITATIONS: Oak Acres Mobile Homes Park, Inc. v. Dept. of Rev., 4 OTR 340 (1971), aff’d 260 Or 562, 491 P2d 620 (1971); J. R. Widmer, Inc. v. Dept. of Rev., 4 OTR 361 (1971), aff’d 261 Or 371, 494 P2d 854 (1972)

Law Review Citations

59 OLR 124 (1980)

“Assessor” includes deputy
Registered appraiser requirements
Alternate qualifications for registered appraisers
Penalty for failure to file certain statements within time limits
Assessor’s annual report on property appraisal program
Special assessor appointed if assessor fails to act
Continuing education of county assessors required
Qualifications of managerial employees of assessor
Action by department when appraisals not being conducted as provided by law
Administering of oaths by assessors and deputies
Personal property
Minerals, coal, oil, gas or other severable interests owned separately from realty not subject to tax
Partnership property
Undivided interest
Undivided estate of decedent
Trustee or personal representative separately assessed
“Property” and “property tax account” defined
Determination of maximum assessed value and assessed value
Definitions for ORS 308.149 to 308.166
Certain cities authorized to define “area” as city by ordinance or resolution
New property and new improvements to property
Subdivision or partition
Lot line adjustments
Property tax account modifications
Ordering provisions when property is subject to multiple special determinations of value
Real market value defined
Computation of real market value for taxing or bonding limitations
Assessing property
Requirement for property owner to file address
Contents of assessment roll
Form of assessment and tax rolls
Assessment and tax rolls
Boundary changes
Only registered appraisers to appraise real property
Property to be valued at 100 percent real market value and assessed at assessed value
Use of sales data for physical appraisal
Record of last appraisal
Valuation of real property
Land values to reflect presence of roads
Description of real property
Assessor’s authority to change roll after September 25 limited
Valuation and assessment of personal property
Assessment, taxation and exemption of watercraft and materials of shipyards, ship repair facilities and offshore drilling rigs
Watercraft used for reduction or processing of deep-sea fish
Public lands sold or contracted to be sold to be placed on assessment roll
Use of reproduction cost or prices and costs in determining assessed values
Requiring taxpayer to furnish list of taxable property
Penalties for failure to file real property or combined return on time
Penalty for failure to file return reporting only personal property
Personal property returns to note penalty for delinquency
Penalty for neglecting to file real property or combined return with intent to evade taxation
Disposition of penalties
When list of persons issued electrical permits supplied
Examining witnesses, books and records
Oath of assessor upon completion of assessment roll
Duty of assessor to assess properly
Department testing work of county assessors
“Industrial plant” defined
Appraisal and real market valuation of industrial plants
Effect of election to exclude income approach to value under prior law
Confidential information furnished under ORS 308.411
Proration of taxes after destruction or damage
Relief not allowed in case of arson by property owner
Definitions for ORS 308.450 to 308.481
Application of ORS 308.450 to 308.481
Determining boundaries of distressed areas
Valuation of rehabilitated property not to be increased
Qualifications for limited assessment
Processing applications for limited assessment
Fee for limited assessment applications
Owner to file statement with governing body when rehabilitation project finished
Owner to file annual statement regarding rental property transactions if agreement filed under ORS 308.462 (2)
Termination of limited assessment for incomplete construction or noncompliance
Termination of limited assessment for change of use
Extending deadline for completion of rehabilitation project
Determining value of homes for elderly persons
Definitions for ORS 308.505 to 308.674
Real and personal property classified for ORS 308.505 to 308.674
Department to make annual assessment of designated utilities and companies
Certain exceptions to ORS 308.515
To whom property assessed
Legislative intention with respect to ownership or operation of data centers
Local assessment of data center property
Property of cooperative providing steam or hot water heat by combustion of biomass exempt
Companies to file statements
Contents of statement
Company not relieved from making other reports
Extension of time for making reports or statements
Department to prepare assessment roll
Mode of valuing property
Valuing property of company operating both within and without state
Unit valuation of property
Taxation of aircraft
Assessment roll
Apportionment of assessment among counties
Determining value per mile of main and branch lines of companies using rail lines
Determining value per mile of property of companies using wire, pipe or pole lines or operational routes
Department to review and correct tentative assessment roll
Notice of tentative assessment
Request for conference to modify tentative assessment
Delivery of tentative assessment roll to director
Review and correction of tentative assessment roll
Notice when valuation increased or omitted property placed on tentative assessment roll
Director’s examination of rolls
Entry of corrections and changes
Oath of director upon completion of review
Keeping roll as public record
When assessment complete
Correction of certified roll
Omitted property subject to assessment
Notice of intention to add omitted property to assessment roll
Correction of assessment roll to reflect omitted property
Assessment and taxation of personal property of small private railcar companies
Reports by companies of mileage to county assessors
Companies to maintain principal office and agent within state
Rules and regulations
Railroad car exemption
Elective exemption of certain communication-related property
Exemption equal to difference between real market value of company’s centrally assessable property and 130 percent of cost of company’s centrally assessable real and tangible personal property
Definitions for ORS 308.701 to 308.724
Option of owner to choose special assessment
Valuation of multiunit rental property subject to special assessment
Application procedure
Methods to determine specially assessed value
Application of property tax expenditure funding
Mutual and cooperative electric distribution systems subject to tax on gross earnings
Amount of tax
Association to file statement
Examination of return by department
Tax as a lien
Notice and payment of taxes before movement of mobile modular unit
Definition of “mobile modular unit”
Manufactured structures classified as real or personal property
Travel or special use trailer eligible for ad valorem taxation upon application of owner
Determination of real market value of manufactured structure without physical appraisal
Green check means up to date. Up to date