Santa Monica Realty

Information on Decline in Value Reassessments

Information on Decline in Value Reassessments

It has been widely reported that the property values of single-family homes and condominiums throughout most of the State have been declining. While the declines in Los Angeles County have not been as dramatic as those in other parts of the State, property values have dropped in some areas of Los Angeles County.

How does this impact your property taxes? 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.” A decline-in-value occurs when the current market value of your property is less than the assessed value as of January 1.

Typically, an application is required to initiate a review of your property’s value by the Assessor. However, in 2008 the Los Angeles County Assessor’s Office will be proactive in reviewing those single-family homes and condominiums that were purchased between July 1, 2005 and June 30, 2007. We will look at sales of comparable properties that sold near the lien date, January 1, 2008. If the market value is less than the assessed value indicated on your 2007-08 tax bill, the assessed value will be reduced accordingly. An application will not be necessary.

We will complete this review by June 1, 2008 and will notify in writing those property owners who qualify for a reduction in the assessed value of their property. Applications will be accepted prior to June 1, 2008, but if you purchased your home between July 1, 2005 and June 30, 2007, we urge you to wait for notification from our office before filing. Should it be necessary, you will have until December 31, 2008 to file an application for review.

If the sale date of your property is not within the dates noted or is other than a single family home or condominium, it will not be included in the review. However, if you believe the assessed value of the property shown on the 2007-08 tax bill is more than the fair market value as of January 1, 2008, you may file an application at any time through December 31, 2008.

We are aware of at least one private company that did a mass mailing to property owners offering their services to pursue a reduction in their property taxes. Specifically, they are seeking to file an assessment appeal on the property owner’s behalf. While there is no initial fee charged for the filing of an appeal, if a reduction is granted, this particular company will receive 45% of the amount of the tax savings for the next two years. We expect other private companies to offer similar services for a fee or a percentage of any tax savings.

Solicitations of this type may not be illegal, but property owners should be aware that the Assessor’s Office provides a simple filing process for a reduction in their property taxes at no charge.

 

 

 

 

 

Decline-in-Value Reassessments

 

Proposition 8 – What is It?


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.” A decline-in-value occurs when the current market value of your property is less than the current assessed value as of January 1.1

Eligibility Requirements

 

  1. You must demonstrate that on January 1, the market value of your property was less than its current assessed value.
  2. You must file a claim form for a Decline-in-Value Reassessment Application (Prop.8) with the Assessor between January 1 and December 31 for the fiscal year beginning on July 1. If December 31 falls on a Saturday, Sunday, or a legal holiday, an application is valid if either filed or mailed and postmarked by the next business day.

The Process

 

  1. On your claim form, provide the Assessor with information that supports your opinion that the market value for your property is less than the assessed value. The best supporting documentation is information on sales of comparable properties. You should select two comparable sales that sold as close to January 1 as possible, but no later than March 31. You may query the Assessor’s database for sales in your neighborhood by clicking here. While the submission of comparable sales is helpful for the Assessor in determining the market value of your property, applications submitted without comparable sales will be accepted and processed.
  2. An appraiser will review your claim form and the information you provide. Other sales information available to the Assessor may also be considered. If the market value as of January 1 is less than the trended base value2, your assessed value will be lowered to the market value for the fiscal year beginning on July 1. The adjusted value will be reflected on your annual tax bill.
  3. If the current market value is higher than the trended base value, no change in assessed value will be made.If you disagree with the Assessor’s findings, you may file an appeal with the Assessment Appeals Board. You must file your appeal between July 2 and November 30 for your annual tax bill.

Example

A property was purchased for $500,000. During a three-year period, the real estate market declined and recovered. The property owner filed for a decline-in-value reassessment. The following table shows the trended base value of the property, the market value of the property, and the assessed value of the property. Assumimg a 2% Annual C.P.I.:

 

Base Value Trended

Market Value

Assessed Value

Year 1

$500,000

$500,000

$500,000

Year 2

$510,000

$480,000

$480,000

Year 3

$520,200

$510,000

$510,000

Year 4

$530,604

$550,000

$530,604

 

 

Frequently Asked Questions

 

Q.

Do properties other than single family residences qualify?

A.

Yes. All real property qualifies.

Q.

What is a comparable sale?

A.

A property sold with features that are similar to your property is a comparable sale. Comparable sales information helps you analyze the value of your home. For example, a property similar in location, zoning, size, number of bedrooms and bathrooms, age, quality and condition to yours that sold in the open market is a comparable sale.

Q.

Where can I find comparable sales information?

A.

A good place to start is online. The Assessor’s website offers sales information for properties that have sold within the last two years. The same information is available from any Assessor District Office. Also, many websites offer sales information free of charge. A local real estate agent or title agent can also be a valuable source of information.

Q.

I filed my Proposition 8 Application by December 31. When and how will I know if my value will be reduced?

A.

You will receive notification by mail before July 1.

Q.

If my assessed value is reduced, how long will it last?

A.

Proposition 8 reassessments are not permanent, but last at least one year. The assessed value may decrease or increase depending on the market value of your property on January 1 of each subsequent year. Your assessed value will never increase more than the trended base value. It is important to remember, however, that base year values suspended by Proposition 8 reassessment values continue to increase by an annual inflation factor of no more than 2% per year.

 

 

How Do I File for Proposition 8 Tax Relief?

 


A claim form is available from several sources. Choose what is most convenient for you.

 


Online: Forms are available at the Assessor’s website: assessor.lacounty.gov

 


Email: Send us an email at helpdesk@assessor.lacounty.gov

 


Phone: Call (213)974-3211

 


Claim forms may also be requested by mail or in person at any of our offices listed in this brochure.

 

What Form Do I Need?

 


Decline-in-Value Reassessment Application (Proposition 8) (RP-87)

 

 


1To read the law associated with Proposition 8, see Revenue and Taxation Code, Section 51. It is available online at www.boetaxes.ca.gov/property.

 

2Property is assessed at the time of sale or transfer (base value) or new construction. That base value increases a maximum of 2% (trend) each year (i.e. trended base value).

 

April 07 2008 04:22 pm | Home Ideas and Tips and Lending Info and Local LA Real Estate News

2 Responses to “Information on Decline in Value Reassessments”

  1. Information on Decline in Value Reassessments Says:
    April 7th, 2008 at 4:42 pm

    […] move2westlinn wrote an interesting post today onHere’s a quick excerpt Information on Decline in Value Reassessments It has been widely reported that the property values of single-family homes and condominiums throughout most of the State have been declining. While the declines in Los Angeles County have not been as dramatic as those in other parts of the State, property values have dropped in some areas of Los Angeles County. How does this impact your property taxes? In 1978, California voters passed Proposition 8, a constitutional amendment that allows a tem […]

  2. Taxes Says:
    April 7th, 2008 at 5:28 pm

    […] Daniel wrote an interesting post today onHere’s a quick excerptHow does this impact your property taxes? 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. … […]

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