My New Blog

Received the following email today that reads in part,

"Hi Dana,

I just got the notice Friday that they accepted the appeal.  I am quite a happy customer, so thank you...."

Their home was in one of the county's more expensive neighborhoods, and it was purchased a few years ago.  Every year their assessment went up the 2% per year allowed by Proposition 13, including the current year.  While the assessor tries to be fair, it is not possible for the appraisers there to physically appraise every property in the county every year.  As a result, many properties, it seems, get the automatic 2% increase each year.

This past year, however, prices did drop in several of the higher priced neighborhoods.  The owners of this house felt that their current assessment to be too high, so they made an appeal.  They contacted me to do an appraisal for their appeal, and I found no sales that occurred from July 1, 2008, to March 31, 2009, that would support a value as high as their current assessment.  The market value of their home was, in fact, several hundred thousand dollars below the assessed value.

So, it was a good news - bad news situation.  The bad news was that their home was worth less than it had been at one time.   The good news is that at least their annual property taxes will also be less for the time being.  They are planning to stay in their home, not sell it in the foreseeable future, so eventually the market value of it will regain what it had lost, and once again their assessment will reflect that, and their annual taxes will increase again.

But that is likely to be years from now.  Until then, they will be saving several thousand dollars each year in property taxes.  Property taxes, by law (Propostion 13) are 1% of the property's assessed value.

If you have reason to believe that your property is assessed too high for the current tax year, you have until September 15 to file for an appeal.  Here is a link back to the page on my website that has a link to several of the area's Assessors for their particular counties:

http://www.dlg-assoc.com/AssessmentAppealServices

By clicking on the link to your particular county's Assessor, you should be able to find out what you need to do to get the appeal process moving forward.

Good luck.

DLG, SRA

County assessor 'overwhelmed' by reassessment requests

By Sue McAllister

smcallister@mercurynews.com

Posted: 08/28/2009 06:26:35 PM PDT
Updated: 08/29/2009 04:00:48 AM PDT

Santa Clara County Assessor Larry Stone said about 34,000 homeowners had requested informal reviews of their assessed values, nearly four times the number of requests in 2008. Nearly half of the 29,000 his office was able to process received tax cuts.

And that came after more than 90,000 property owners in the county were notified in late June that they would receive average tax relief of about $2,000 because of reduced home values.

The assessment reductions so far total nearly $19 billion, Stone said, cutting the county's budget by about $40 million.

Despite focusing his entire staff on reviewing those 34,000 assessments, Stone said, there were nearly 5,000 requests that could not be finished before a Monday deadline, when the information needs to be sent to the county tax collector. For homeowners whose requests weren't finished, the only option is to file a formal appeal, which requires a $30 fee.

"All of these property owners filed their requests by the deadline of August 15 and should not be penalized," Stone argued.

In a special session late Friday afternoon to address the issue, the county board of supervisors voted 4-0 to waive the $30 appeal fee for the 5,000 homeowners caught up in the bureaucratic snarl.

"Although it will cost us some money as a county, we think it's really important to those who have applied and simply got left out because they (the assessor's office) couldn't get to everyone in time," said Liz Kniss, president of the board of supervisors. "It's really in the interest of fairness and cost to them that we are doing it."

Under a 1978 property tax law known as Proposition 8, if the market value of a property falls below the assessed value assigned by the county, the owner can receive a temporary tax reduction. A home's assessed value is usually the purchase price plus increases of no more than 2 percent a year. The property tax bill is based on the home's assessed value; tax rates are capped by law at 1 percent, plus any amount to cover voter-approved bond indebtedness, such as school district bonds.

Santa Clara County is one of the few counties in California in which owners are notified of their properties' assessed value before they receive their tax bills. In June, Stone's office sent notices to all residential and commercial property owners telling them the assessed values of those properties, which is based on their worth as of Jan. 1, 2009.

Stone said many owners mistakenly think they are eligible for a tax reduction because their home value has fallen compared with its peak. But it's not peak value that matters: To qualify, a property's market value as of Jan. 1, 2009, must be lower than its assessed value.

Those who still feel their properties are assessed too high have until Sept. 15 to file a formal appeal application with the assessment appeals board. By law, those appeals must be decided within two years. While that process takes place, property owners must continue to pay the taxes they owe based on their existing assessment. If the appeals board later agrees the assessment was too high, the taxpayer will get a refund of the overpaid taxes.

For more information on Proposition 8 assessment reductions and the appeal process, visit ?www.sccassessor.org.

Contact Sue McAllister at 408-920-5833.

Today's San Jose Mercury News (8/11/09) www.mercurynews.com/ had an article about luxury home values declining in the the Silicon Valley area.  This was not news to me as I have been doing appraisals for owners of such homes recently.  They've been concerned that the recent assessments they have received have not reflected the decline in the values of their properties.

It is bad enough to be losing value on your home, but if the assessment does not accurately reflect this loss, then the property taxes are going to be higher than they need be.  California's Proposition 13 mandates that the assessed value be no more than the property's market value as of January 1 of each year.  It also sets the maximum amount of taxes to be only 1% of the home's assessed value (plus any other incidental taxes like school bonds, etc., that were approved by voters).  So, if a home is assessed for $3 million, but it's real market value (as of January 1) was only $2 million, than the owners will be paying $10,000 more per year in taxes than they rightfully should be paying (1% of $3 million is $30,000, 1% of $2 million is $20,000 - $30,000-$20,000 = $10,000).

Although the Assessor attempts to assess all properties accurately, that is not always the case.  Fortunately, the assessor does have a free appeals process available to property owners. I have a link to the Assessors' websites for Santa Clara, San Mateo, Santa Cruz and Alameda counties on my website:  http://www.dlg-assoc.com/AssessmentAppealServices.

Instructions for filing appeals can be located on each of the websites.  It is highly recommended that the appeal be accompanied with evidence to support the appeal for a different value (I suppose you could appeal for a higher value, but why would you?).  An excellent support document is a real estate appraisal prepared by a qualified appraiser.  Generally, a designated appraiser from a professional appraisal organization such as the Appraisal Institute or American Society of Appraisers is considered to be qualified to perform such appraisals for the appeal process.  Data from sources like Zillow, or from hearsay (my real estate agent who sold me my house thinks it's is only worth ...., etc.), are not acceptable as evidence.

Recently I did an appraisal for someone who received an assessment they believed to be too high.  As part of the appraisal process I did an analysis of luxury home sales in the Los Gatos/Monte Sereno/Saratoga market area where the subject property was located.  For the analysis I used the same parameters the assessor uses - sales of comparable properties that sold in the market area between July 1, 2008 to March 31, 2009.

What I found was that typical prices of such homes in that particular market area dropped from a high of about $650/SF in October, 2008, to about $550/SF as of January 1, 2009, a decline of approximately 15%.  Using comparable homes to fully support my opinion of value as of 1/1/09, I found that the assessed value was over a million dollars higher than I believe the property to actually be worth.

The owners of the subject property bought their home a few years ago when values were higher, paid a fair price for it at that time, and for awhile their home's value went up, just like most everyone else's.  Although home values increased considerably during that period, Proposition 13 also mandates that the assessed value of a property can rise by no more than 2% per year.  In their case, it appears that their assessment went up 2% after the first year, 2% the next year, and so on.  The assessor continued that 2% increase for 2009, but the market actually declined from the previous year rather than increased.

There is no guarantee that the appeals board will agree with the independent appraiser's opinion of value.  They may recommend a different value, perhaps somewhere in between the assessor's opinion and the fee appraiser's opinion.  Chances are, however, that a well supported appraisal will provide a basis for a lowered assessment at, or near, the opinion of value of the qualified independent appraisal expert.  Savings on property taxes, not only for the current year, but perhaps for years to come, could be substantial, maybe thousands of dollars, and be well worth the cost of the appraisal.

Call me at (408) 287-4686, or another appraiser you feel to be competent, for a quick phone consultation.  You may end up paying a lot less in property taxes if you have a successful assessment appeal.  The deadline to file for an appeal is September 15.