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Property Taxes on New Construction in Oregon: What to Expect
Oregon’s property tax system was redesigned by Ballot Measure 50 in 1997, and it works differently from almost every other state. If you’re building a custom home in Salem or Bend, the way your tax bill gets calculated when you move in is not the same as how it works for an existing home — and the timing of when your assessment resets matters more than most people expect.
The Baseline: How Oregon Property Taxes Work
Oregon taxes residential property on its Maximum Assessed Value (MAV), not its real market value. For existing homes, MAV increases by a maximum of 3% per year.
New construction is an exception to that cap. When a new home is built, it enters the tax system at an assessed value derived from its Real Market Value (RMV) via a Changed Property Ratio (CPR):
New MAV = RMV × CPR
The CPR is calculated county by county. Marion County (Salem) and Deschutes County (Bend) have different CPRs, which means the same home built in both markets will have different assessed values and different tax bills.
What the Assessment Timeline Looks Like
Oregon’s property assessment date is January 1 each year.
- January 1, home is a vacant lot — assessed at land value only
- January 1, home is partially built — assessor estimates percent complete and taxes accordingly
- January 1, home is complete — full RMV assessed, converted to MAV via CPR
For builds with 10–16 month timelines, expect at least one January 1 mid-construction with a partial assessment.
Marion County vs. Deschutes County
Marion County’s
Marion County’s CPR has historically run 0.55–0.65, meaning new construction is assessed at roughly 55–65% of real market value. For a $700,000 custom home in Salem, that translates to an initial MAV of approximately $385,000–$455,000 and an annual tax bill of roughly $5,000–$6,800.
Deschutes County’s
Deschutes County’s CPR has run lower. Obtain a current estimate from the Deschutes County Assessor’s office during pre-construction planning.
The Escrow Adjustment to Plan For
Most custom home clients finance through a construction loan. Your lender will establish a tax escrow based on the current land assessment — not the completed home. When your first full tax bill arrives after completion, it will be significantly higher. Plan for this adjustment by asking your lender to estimate escrow based on the expected full-build assessed value.
System Development Charges: Not Property Tax, But Often Confused
In Bend, System Development Charges (SDCs) are one-time fees (often $20,000–$50,000+) due before permits are issued. They are a construction phase cost, not an ongoing tax, but are frequently confused with property taxes. Request an SDC estimate from the City of Bend Building Division during pre-construction.
Budget for the First Full Tax Year
Build your long-term housing cost budget around the full assessed value of the completed home, not the current land assessment. Integra Built has guided custom home clients through the financial planning side of new construction in Salem and Bend since 2010. Oregon CCB #234-156.
Other Related Guides About Cost Budgeting
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How Change Orders Work in Custom Home Construction
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