It’s a good news/bad news situation. If your home is worth more than you paid for it, most people would agree that that’s a good thing. And if your home is worth more than you paid for it, you are likely paying the right amount of tax and so are not eligible for the scenarios described below. However, if your current assessed value is more than the fair market value of your home minus $7,000 (your homeowner’s exemption if you occupy the property), you may be eligible for a reduction in your assessed value for the purpose of property tax calculation.
As you my know, under Proposition 13, your assessed value is capped at your purchase price plus 2% per year. Sometimes, the assessor will lower the valuation automatically or not increase it the full 2%. However, as the market rises, they will eventually caputure all of the value of purchase price plus 2% per year. However, from time to time, the market for homes may be below your currently assessed value, even if you have owned your home for some time.
If you believe your home may be eligible for a reduction in property taxes based upon a decline in value, there are two ways you might proceed: an Informal Review by the Assessor’s office and/or a Formal Appeal with Assessment Appeals Board. The Formal Appeal, in particular, can be a complicated and time consuming process. Generally, prices have been rising since about 2010, but since mid-2022, some homes and some condos purchased since 2018 may be also be below their assessed value. Appealing your assessment may save you money in the short term until the assessed value is re-gained based on market forces. If your appeal is successful, the reduction in assessed value only applies to the 7/1/10 – 6/30/11 tax year. A decline-in-market appeal is only good for 1 year, the year for which it is filed. If you decide to pursue this, my team and I will be happy to provide comparable sales to support your efforts.
For more information on how to do this, click below for different bay area counties.
Warning on Scams
There are a number of property-tax-appeal service companies, who have been sending out their solicitations on stationery that suggests a government agency affiliation. SF Assessor-Recorder Phil Ting has stated the following:
“We’ve received reports from dozens of taxpayers who have received a letter from companies offering to facilitate the property tax reassessment for $179 [or more]. This is unnecessary and deceptive. Taxpayers can fill out a simple, one-page application for a review of their property in my office, free of charge… There is no need to pay for this service.”
All information is from sources deemed reliable but subject to error and omission, and not warranted. Interested parties should contact the appropriate government agency to confirm all pertinent guidelines and procedures.