All Entries Tagged With: "california"

Urgent Message-California Property Tax Relief

Tax Help

May, 2010. The market appears to be bottoming out.  At least, so say the gurus.  But don’t you bank on it.  CAPTA believes we are currently in the eye of the storm, with the 2nd half approaching rapidly.  It is precisely at this time you need a professional tax reduction company to guide you through the coming, actually the continuing commercial real estate recession.

California is in a real estate crisis and indeed, an economic crisis the likes of which have never been seen in history.  Major California commercial property tenants such as Mervyns, Hollywood Video, Levitz, Sharper Image, Performance Team Freight, Linens n Things and Circuit City have recently filed for Bankruptcy.  It was only a few short months ago that one of the safest bets in Real Property Investment was a NNN tenant such as Circuit City.  Today, owners of such leases are scrambling to sell their vacant big box space to nonexistent buyers.  So goes conventional wisdom.

You are at this site because you realize that now more than ever before, commercial property owners and managers must streamline their expenses and prepare for a commercial property value decline that is just now becoming evident.  Read the paragraph below from “CoStar Group, #1 Commercial Real Estate Information Company” written in May of 2009:

Retail Space Availability Reaches All-Time High

The nation’s retail market posted negative quarterly net absorption for the first time, along with the highest vacancy and availability rates, since CoStar Group began tracking retail trends in 2000, according to the Bethesda, MD-based company’s first-quarter 2009 retail review and forecast.

CoStar’s research shows that the average days a retail space is listed on the market as “available for lease” has continued to rise — from 174 days in first-quarter 2006 to 370 days in first-quarter 2009…Unfortunately, CoStar is forecasting that the retail vacancy rate will continue to climb…Spivey showed that the average sale price per square foot has dropped from $235 to $125 since the recession started, while the average time a property spends on the market has increased from about 255 to 334 days.

CoStar forecasts that sometime in the next two to three years, the average retail cap rate could hit a level that is 400 basis points higher than where it was at the start of the recession. If that happens, the average cap rate would be around 11% (a high not seen since 1994), which would create better margins for buyers and should fuel transaction activity. Additionally, CoStar forecasts that the average sale price per square foot could go as low as 70% off pre-recession pricing and sales volume could end up as much as 90% off pre-recession activity, sometime in the next two to three years.

Okay, things are bad nationally but what about California?  Here it is:

Spivey identified Los Angeles and Atlanta as having more excess retail inventory than any other markets…The markets with the largest first quarter increase in the average retail vacancy rate: Las Vegas (+154bps), South Bay / San Jose (+113bps), Baltimore (112bps), Inland Empire CA (+111bps), Southwest FL (+98bps), Phoenix (+94bps), Atlanta (+94bps), Sacramento (+89bps), Oklahoma City (+82bps), and Orange County CA (+82bps)…During first quarter, the markets that saw the largest net amount of retail space become vacant, as a percentage of total retail rentable building area (RBA), in order, were: South Bay / San Jose, Las Vegas, Inland Empire CA, Sacramento, Pittsburgh, Baltimore, San Diego, Phoenix, Oklahoma City, and Nashville.

That is the nature of the future of  retail.  But maybe you own apartments or industrial or office buildings.  Then you know that as goes residential so goes retail so goes the rest of the commercial market.  It’s one big game of follow the leader.  While there has been relatively good news in the commercial sector until last year, the tide is currently changing.

Make no mistake; there is a problem, a big problem in the commercial real estate market similar to what just happened and is currently happening in the SFR market.  Obviously you understand the need to be proactive in the face of this problem.  The question we need to answer for you is why use California Property Tax Associates to assist you with this problem.  What sets us apart from our competitors?

We Are Property Owners and Developers

At California Property Tax Associates we understand the problems of commercial property owners, managers and developers because our partners are commercial property owners, managers and developers.  In addition to starting to work in the area of property tax appeals and reassessments in 1989, our associates have various past and current experience building residential development and commercial properties, as well as leasing experience as landlord and manager in the California property market.  You will not be turning your property tax issues over to ‘form filers’ as many companies are, but to a group of people led by commercial property owners and managers experienced in owning and managing commercial properties.  We understand this business from the inside.

And one more very important thing.  Again to quote Andrew Florance, President and CEO of CoStar Group, “When the market is moving this rapidly you have to switch gears and look at it from a different angle.”  He was talking about the fact that the Office Vacancy rate is not showing the real situation in the Office space sector.  But his statement is much more far reaching.

Think Outside The Box

We hate to use this worn out expression but it is exactly what is called for in our current California Property Tax Assessment / Reassessment situation.  The tried and true, follow the book procedures of the past need to be reinvented with each case.  Can you get a loan like you could 2 years ago?  Can you count on real estate appreciation like you could 3 years ago?  Can you count on Chevrolet, Chrysler or Ford like you could a few months ago?  The answer is a resounding NO!  Neither can you approach a Property Tax Assessment Appeal case like you would have just a few years ago.

In the last year there have been many changes in the Assessment Appeals arena.  Appraisal methods used for the past 14 years are being replaced with ’shoot from the hip’ thinking.  To prepare for an Assessment Appeal in California Counties is in many ways like an unscripted debate, where common sense and proving ones case in real life are becoming more important than following ‘the rules’.  That’s what Mr. Florance is saying above:   “When the market is moving this rapidly you have to switch gears and look at it from a different angle.”  And that’s what we do at California Property Tax Associates.

Experience, Knowledge and Common Sense

Our experience started in the last serious downturn in the market back in the early 1990’s.  We worked within our knowledge of the Revenue and Taxation Code, the Assessor’s Handbooks and California Assessment Appeal procedures, and, based upon our extensive experience representing thousands of Clients and working Statewide, we developed strategies to maximize our Clients Property Tax Savings, Credits and Refunds.

The result?  California Property Tax Associates is on the cutting edge ready to put our experience buying, building and managing real estate to work for you.  We will represent you to reduce your property tax liability by using our experience and knowledge of the Property Tax Assessment Appeals system in California.  And the best part to you?  If you do not receive a property tax savings, credit or refund, you owe us nothing.  No Savings; No Fee!

Contact us at (909) 867-5000 immediately with any questions or go to our Frequently Asked Questions page.  Or if you’d rather, just click here to CONTACT US by email and we will call you.  But don’t put this decision off; deadlines are rapidly approaching.

Commercial Property Values Decline

Down 49%

If you own real property in the state of California then you know commercial property values are falling. Further, you know your California property tax  value has not.  This was a headline in late September relating to the commercial property market:

Moody’s: US commercial real estate prices resume steep declines in July

New York, September 21, 2009 — Commercial real estate prices as measured by Moody’s/REAL Commercial Property Price Indices (CPPI) renewed its steep declines and low transaction volume in July, Moody’s Investors Service reports. The CPPI was down 5.1% from June after having declined by only 1% the prior month. It is now 30.8% below what it was a year earlier and 38.7% below the peak measured in October of 2007.

We suspect that you are well aware of these factors and, in fact are here because of them. No one knows the direction of the market for the future but one thing we know for sure: property tax values in California for commercial real property is high while values are dropping. Take a look at some of the recent reductions we have achieved on different kinds of real property in the commercial California property tax market:

That is $412,108 in annual property tax savings for our Clients in the 2009 tax year. That’s $412,108 that the California state government will not get. And that is $412,108 that will go to the bottom-line for our commercial property Clients. It should be noted that several of these Clients told us when we took these properties last year that there was nothing there relative to a decrease in the assessed value. But we know that the assessed value that we work with and the fair market value that our clients know are two different things.

In California, in the commercial real property market the times are tough.  We believe they are going to get tougher.  Never in our experience has there been a greater need to reduce the expenses in the bottom line of every company in California.  California Property Tax Associates can definitely help. But only if you act.

Act now and call us at (888) 678-9TAX.

County Property Assessment-Proposition 13

The following is a simplified discussion of Proposition 13 and California property taxes in general. It is not a complete Prop 13 explanation but simply an introduction into the California property tax assessment procedures. For a complete understanding of the California property tax Law on a county by county basis, please read the Property Taxes Law Guide and The State Board of Equalization audits (this one is for Contra Costa as an example).

Pre Proposition 13

Before the passage of Proposition 13 California property taxes were raised by an annual assessment of all property located in the state of California. Simply stated California property tax was based on the fair value of your property each year as shown in the assessment on your tax bill. Each year, as California property values increased, so did the value assessment for the property tax payment.

The system worked fine until California property values began to appreciate at an accelerated rate, which then resulted in increasingly higher assessments and increasingly higher California property taxes. People who didn’t change residences or other properties found themselves with escalating California property tax bills with personal income that didn’t follow suit. The California property tax system was broken and the fix was Proposition 13.

Proposition 13

To summarize, before proposition 13 California property taxes were based upon the fair market value of your property each year. Should values increase at a greater than normal rate, so did your California property taxes.

With Prop 13 California property tax law changed extraordinarily as stated in the paragraph from Proposition 13 below:

Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed One percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

This meant that each year the state could collect no more than 1% of the assessed value of California real property.  It went on to say that the county assessor could raise the value of the given property no more than 2% annually. As an example, if the value increased 5% this new California property tax law limited the assessment to a 2% increase.

As stated in an earlier page, when a new property is completed (completion of new construction) or when a property is sold (change in ownership) Proposition 13 provides that a base year value be determined. To assist in this determination a rule was created, Rule 2 which stated that in the absence of evidence to the contrary, it would be assumed that fair market value was the price paid in a sale of property made in an arms length  transaction between a knowledgeable buyer and a knowledgeable seller neither of which was taking advantage of the other.  For the purpose of making a value assessment for California property taxes, if the buyer bought a property for $500,000 from the seller with no extenuating circumstances, then $500,000 would be considered the base your value.

Proposition 13 then stated that each year the maximum assessment increase was the base year +1%. The taxpayers voted, the government cried foul but the vote carried and Proposition 13 was passed.

All went well in the property tax world as properties appreciated and taxes lagged behind until something different happened.  Property values began to fall and yet the assessed value continue to be raised by 2% in accordance with Proposition 13.  This presented an unforeseen problem with assessments for California property taxes which resulted in a new Proposition.

Go to PROPOSITION 8

If this is enough information and you wish to have your property taxes reduced, please call us immediately at (888) 678-9TAX or fill out the simple form below and we will contact you at your convenience.

Comments or questions are welcome.

Contact Form

Name:

E-Mail Address:

Property Type

Approximate Value

Office Phone

Cell Phone

Subject:

Message:

CAPTCHA Code:

County Property Assessment-Proposition 8

Pre Proposition 8

Before Proposition 8 (California property taxes measure) was adapted in late 1978 the voters passed Proposition 13 which held that only a 2% increase in the assessed value could be enrolled by the County assessor for any given year despite the actual amount of increase in the real property value. California property tax payers were very happy with this property tax measure as it limited their property taxes they have to pay each year in the face of an ever appreciating real estate market. But what would happen if the values actually fell?

County property tax payers understood real quick that they had painted themselves into a corner. They had a piece of legislation that said the value of Real property could be raised to more than 2% a year; now they needed something to address property tax values in a declining market.

In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when a real property suffers a “decline-in-value.” A decline-in-value occurs when the current market value of real property is less than the current assessed value as of January 1 of a given year.

As an example for California property tax purposes, say your property has a value of $200,000 on January 1. The assessor needs to prepare the property tax value for the upcoming fiscal year, which runs July 1 through June 30 of each year. January 1, prior to the beginning of the fiscal year is the date of valuation for each fiscal year. So on January 1 your property was worth $210,000. But under Proposition 13 the California property tax assessor can only place an assessment $202,000, even though the market value is $210,000.

Taking the same example for California property tax purposes, say your $200,000 property has a value of $190,000 on January 1. Under Proposition 13 your property would still be valued at $202,000. But under the new Proposition 8 the assessor is allowed to enroll the lower of the factored base year value ($202,000) or the current fair market value ($190,000). The assessment should rightfully be $190,000. But is it?

Problems with the System

We’ve shown how the California property tax payer tried to deal with an unfair property tax system. Both Proposition 13 and Proposition 8 attempted to regulate the value of the assessment so that real property owners pay the right California property taxes in both an appreciating and a depreciating market. But notice the wording in the paragraph about Proposition 8:

In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when a property suffers a “decline-in-value.”

Notice that the amendment “allows” a temporary reduction. Some County assessor’s have held they are not required to reduce values. Others have been very forthcoming in recognizing the value declines and have been very proactive. But they can never do the job of recognizing individual property valuation changes. So they are held to doing mass appraisal for the most part on housing tracts and across very similar properties. Invariably, some are too high and some are too low. And still there is another problem.

Once the property taxes and the value have been reduced under Proposition 8, the County assessor is charged with raising the California property tax value when the value increases. Once again this is very subjective. The assessor enrolls a value of $195,000 for the coming year. Should it have stayed at $190,000? Should it have dropped further? Should it have been $193,000. All of these answers are dependent upon one person’s opinion of value. Are you content to let the assessor’s office make that determination?

Let’s look at some bigger numbers. In one of our examples of a recent reduction achieved on a property in central California, a $36 million property was reduced to $15 million. That’s an annual property tax savings of $226,000 for our client. Maybe next year the California property tax assessor wants to raise the assessment up to $25 million. Will that be correct? Maybe it should be $22 million. The difference is some $30,000 in California property taxes paid. That’s a lot of money for one man’s opinion.

So there you have it. Under Proposition 13 the value can only be raised 2% per year. Assuming the annual property tax values appreciate greater than 2% there is no dispute. But if the values depreciate there is only one thing to do: fight!

Go to PREPARING THE APPEAL

If this is enough information and you wish to have your property taxes reduced, please call us immediately at (888) 678-9TAX or fill out the simple form below and we will contact you at your convenience.

Comments or questions are welcome.

Contact Form

Name:

E-Mail Address:

Property Type

Approximate Value

Office Phone

Cell Phone

Subject:

Message:

CAPTCHA Code:

Proposition 8 and Proposition 13

California Property Tax Law as practiced in each county by the County Assessor's office is contained within the Property Taxes Law Guide.  The California State Board of Equalization oversees the Assessor who in turn sets values, both house and commercial property values.

In the county where the assessment is to be made, the California property tax Assessor has the responsibility of setting a base year value for every property. This occurs generally on the completion of new construction or change in ownership of a given property. Once the base year value assessment is made the California property taxes then fall under Proposition 13 and Proposition 8.

PROPOSITION 13

On June 6, 1978 Proposition 13 (Prop 13) was selected by the voters in the State of California to be the tool to lower and stabilize Assessment Values in every county.  Under Prop 13 the base year value is established upon a change in ownership or completion of new construction.  Thereafter assessed value increases are limited to 2% per year by the Assessor of each county .  The County Assessor may however choose not to increase the value or even lower the assessment value in certain cases.

This was an excellent idea as long as property values were appreciating. But what would happen if property values depreciated? For this reason, Proposition 8 came to be.

PROPOSITION 8

Proposition 8 provides that, as it pertains to California property taxes, the County Assessor may, in any tax year where the fair market value of an assessed property is lower than the value on the assessment roll, reduce the value.  The problem is that seldom does the County Assessor initiate the value reduction correctly.   When an attempt is made it is generally not sufficient to reflect the actual fair market value.  Because of this, the responsibility for a property tax reduction is on you, the property owner.

The second problem with Proposition 8 is that the Assessor "may" reduce the value of the assessment.  Many county assessors offices simply do not have the personnel to determine fair market value of the real property in the county timely. Many others fail to admit the value reductions have taken place and should be reflected in the California property tax assessment. In these cases the California property tax payer must act.

Depending on the time of the year different options may be taken relative to the property type. Informal appeals as well as formal appeals can be requested and filed, dialogue with the assessor's representatives relative to the California property tax assessment value can be made, and, generally as a last resort, an appearance before the California property tax Assessment Appeals Board may be required.

The experts at California Property Tax Associates-CAPTA have the experience to handle any property type in any California County. Over the many years of their existence they have saved thousands upon thousands of clients millions and millions of dollars.

If you're ready for your county property taxes to be reduced to their lowest possible value please call us at (888) 678-9TAX.  Or, if you prefer simply fill out the form below and we will contact you at your convenience.  But please do so now as deadlines are rapidly approaching and, once past all potential for a reduction is lost.