HANOVER, VA (WWBT) - If you own a car, you might be seeing a hike on your personal property tax bills. Thanks to the economy and Cash for Clunkers, the basic principle of supply and demand is driving some used car prices up.
It's a fairly simple notion -- the fewer cars available, the more the ones that are will cost you.
There are more used cars on the roads these days, meaning there are less on the lots to buy. The economy has many consumers choosing lower priced used cars over newer options. That means the National Automotive Dealers Association or NADA book value of some vehicles has gone up.
Jonathan Banks, the Executive Auto Analyst for NADA says, "what we've seen is used car prices really across the board for cars and trucks have been increasing year over year."
For instance, the commissioner of revenue in Hanover County says that some cars have increased in value by as much as 26 percent. Other values decreased. Personal property taxes are based by law on the value as of January 1 of that year. Automotive experts say they understand why people might be surprised.
Banks says, "it's a fairly straight-forward situation, but it hasn't happened before."
Really, it's Economics 101: supply and demand. The supply for used cars is low, while the demand is high, and high demand means a higher price.
In addition to the economy, Cash for Clunkers is also factoring in. While that program actually helped stimulate new car sales too, it pulled more used cars off the market, again lowering the overall supply.
Experts hope people can look at the bright side and ask consumers to look to the housing market for inspiration. You likely wouldn't be sad if the value of your home went up, so why would you be sad if it's your car's value that increases.
Banks says, "a lot of people are going to look at their taxes going up again for vehicle values, but there's a silver lining to it all because if they were in a position to be able to purchase a new car, they bring in their trade-in, they're going to get more money for that car."
In Hanover County, personal property taxes are due on Feb. 5, but if you pay the bill before the end of this year, you can deduct the amount from your 2010 itemized tax return.