Property Taxes and Eminent Domain: What Happens When Government Takes Your Land
TL;DR
When the government takes all or part of your property through eminent domain, your property tax assessment should decrease to reflect the reduced property. For a full taking, property taxes stop entirely once the government acquires title. For a partial taking (road widening, utility easement), the assessed value should be reduced by the value of the portion taken. You are entitled to "just compensation" for the taken property. If your assessment is not adjusted after a partial taking, contact the assessor or file an appeal. The compensation you receive is generally not taxable income if it does not exceed your basis in the property.
Full Taking
In a full taking, the government acquires your entire property. Once the deed transfers to the government:
- You no longer owe property taxes on the property
- Taxes are prorated to the date of transfer
- Any taxes owed up to the transfer date must be paid (usually deducted from compensation)
- Government-owned property is exempt from property taxes
Partial Taking
A partial taking removes a portion of your property while you keep the rest. Common scenarios include:
- Road widening that takes your front yard
- Utility easement across your property
- Railroad or transit corridor
- Flood control infrastructure
After a partial taking:
- Your assessment should decrease by the value of the taken portion
- If the remaining property also lost value (called "severance damages"), the assessment should reflect that too
- The reduction does not happen automatically in all counties. You may need to request it.
Just Compensation
The Fifth Amendment requires "just compensation" for property taken through eminent domain. This is typically fair market value. The compensation amount is determined by appraisal and negotiation, or by a court if you and the government cannot agree.
If Your Assessment Is Not Adjusted
Contact the county assessor with documentation of the taking (condemnation order, deed, survey). If they do not reduce the assessment, file a formal appeal. You should not be taxed on property you no longer own.
For any remaining property, check whether the overall assessment is fair with our free property tax analyzer.
Frequently Asked Questions
What should I know about property taxes and eminent domain: what happens when government takes your land?
When the government takes all or part of your property through eminent domain, your property tax assessment should decrease to reflect the reduced property. For a full taking, property taxes stop entirely once the government acquires title. For a partial taking (road widening, utility easement), the assessed value should be reduced by the value of the portion taken.
What should I know about full taking?
In a full taking, the government acquires your entire property. Once the deed transfers to the government:
What should I know about partial taking?
A partial taking removes a portion of your property while you keep the rest. Common scenarios include:
What should I know about just compensation?
The Fifth Amendment requires "just compensation" for property taken through eminent domain. This is typically fair market value. The compensation amount is determined by appraisal and negotiation, or by a court if you and the government cannot agree.
What should I know about if your assessment is not adjusted?
Contact the county assessor with documentation of the taking (condemnation order, deed, survey). If they do not reduce the assessment, file a formal appeal. You should not be taxed on property you no longer own.