All Entries Tagged With: "prop 8"
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.
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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.
Do It Yourself Reduction
by Jim Guffey
If you are a homeowner with a tract home or typical single family residence, here it is: the step by step summary to getting your property taxes reduced. Free. You don’t have to pay an agent or consultant or attorney. You simply must follow these steps. But first a quick Proposition 13 Primer.
Simply stated, Proposition 13 provides that when a homeowner purchases his or her property, under normal conditions, it is presumed that the purchase price shall be the fair market value or the assessed value for property tax purposes. This beginning value is called the “base year value.” Prop 13 goes on to say that each year the Assessor can raise that base year value by no more than 2%. That’s great news for markets like we had in 2004 and 2005 as your property values were limited to 2% increases even if you had a 10% increase in value. So far so good.
But then something strange happened: the real estate market went backwards and home prices fell. For the first time people were stuck with assessed values higher than their home was actually worth. To remedy this problem Proposition 8 was passed which, simply stated, allowed the Assessor to reduce the value in any year that the actual value of the property fell below the value on the assessment roll. This was intended to provide temporary relief for the property owner as the Assessor retained the right to raise the value in any year that the fair market value exceeded the value on the roll up to it’s factored base year value (the value that would have been on the roll had no reduction been given).
Let me restate all that simply. If, on January 1, 2008 your home was worth less than your 2007 tax value plus 2%, you have the right to ask for a reduction. But it will be temporary, and will be put back to normal when values increase. So much for the primer. Let’s get on with the process.
Assuming you have reason to believe your assessed value is higher than your market value, the next step is to go to your local office of the Assessor in your county to get information. There are 58 counties in California and I’m here to tell you they all are run differently. But no matter; just go and ask for the details of the Prop 8 reduction.
At this point in the year there will likely be the need to do one of two things: file an Informal Prop 8 Request for Review or, if they are too busy or just don’t want to help, file a Formal Appeal.
The informal request is simply that. You are requesting they take a look at your property. Some counties have a form and require a few comparable properties. Others simply log your request. Still others won’t give you the time of day and you will have to take the next step.
Whatever happens at this point you must understand one very important thing. In most counties you only have a short window to file your formal appeal. For us it’s July 2 to November 30. Be sure to find out what the deadline is for your property. Once the deadline passes and your application is not postmarked on or before that day, you lose your rights to protest the value and you will overpay your taxes until the next year.
At this time of the year I would suggest you file the formal appeal right now regardless of whether the appraiser at the Office of the Assessor tells you he or she will take a look at your property. You can always withdraw the appeal if you should reach a suitable value. Simply ask for the appeals form while you are at the office or go online as many counties now feature online forms.
Please take note that you must fill out the form carefully. Again, every county is different and they are not user friendly. You should always ask for help from the Office of the Assessor or local Clerk of the Board with anything you do not fully understand. If you fill it out wrong it will be returned to you. Be very careful to return it immediately once you have corrected the problem. Remember, at every turn there are procedures and deadlines. As a do it yourself tax agent you have the responsibility to do it right-or lose.
A word at this point about values. Whatever your assessed value is, put down no more than half for your opinion of value. Again, you can always adjust the value up at the hearing but you can not ask for a lower value than is on your appeal.
Once filed the county has two years from the date of filing to hear your case. You must pay your property taxes during this time based on the full value you are contesting. If you do not pay you possibly will incur penalties and interest. Do not take that chance. If you win your overpayment will be refunded to you along with interest-if you request it!
Now, don’t just sit and wait. Come January 1, 2009 (or the next business day) go directly to your Office of the Assessor and start the process over for the 2009 fiscal year. It’s entirely possible you will have several years of appeals filed and awaiting a hearing date. If you are not successful talking informally or filing an informal Proposition 8 Request for Review you will need to file another formal appeal. That will keep on happening each year for as long as necessary.
Once you are in the queue it is all about waiting. But remember. Two years from the date of your filing if you haven’t signed an extension and your case hasn’t been heard…YOU WIN! Whatever value you wrote on the appeal is the value for the year under appeal. I have won several cases this way. Be aware of the filing date and never sign an extension without first checking the dates.
For a list of California Counties and their websites click here.
For a list of California County Assessor Offices and their phone numbers click here.
That’s all there is to it. Watch for the next article on “Representing Yourself in a Formal Appeals Board Hearing”. If you have questions please don’t hesitate to contact us at (888) 678-9TAX or use the form below.
