Tip of the Month - August 2008

Understanding Your Annual Property Value Notice

If you own property, it is likely that you recently received a Property Value Notice from the county assessor's office. This Notice informs property owners of the taxable value of their property. Understanding this information is especially useful in this current economic climate where we are witnessing a decline in real estate values.

Background:

When reading your Property Value Notice, it is helpful to know the difference between the market value and the taxable value of your property.

• The market value is how much the property would sell for in the current market.


• The taxable value (or assessed value) is established by the county assessor based on Proposition 13 guidelines which limit increases to 2% per year as long as the property does not change hands. This value is established on January 1st of each year.

Proposition 13 was approved by California voters in 1978. It has kept taxable values lower than market values during the long real estate boom, but the recent decline in market values has created the unusual situation in which a property's market value has dropped below its taxable value. Property purchased between 2005 and 2007 may be more likely to fall into this category.

Your Property Value Notice:

The notice you received from the assessor is likely to describe one of two situations:

• Your property's value was higher than the Proposition 13 value on January 1st of this year. This will be the case for the great majority of property owners. A 2% adjustment has been added as required by California law. Related property taxes may go up accordingly.


• The market was lower than the Proposition 13 value on January 1st. Taxable value has been temporarily reduced or kept at last year's value. Related property taxes may decrease accordingly.

Appealing Your Property Tax Assessment

Remember that market value is nearly always greater than taxable value, even during times of economic downturn. In addition, assessors across the State are required to review and temporarily reduce the taxable value of property when its market value falls below the taxable value. Nevertheless, if you believe the county is over-charging you for property taxes, you can request to have your tax bill lowered.

Property owners may be granted a temporary reduction in property taxes only if the market value falls below Proposition 13 taxable values. In order to see a reduction in your taxes, you must be able to prove that the taxable (assessed) value of your property exceeds what it can easily sell for. This means providing examples of similar properties in your area that sold for less than your assessment. Each property is unique, and the assessor must consider all aspects of the property and market conditions when making its determination. These include comparing property conditions, use, age, location, size, and amenities.

Your best resource for information about the appeals process is the assessor's office in the county where your property is located. Check the county's website for instructions, filing dates, and access to required forms.

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