Appealing your Property Taxes
Counties in California have recently issued property value notices which contain real estate assessed values. Even though counties have decreased some assessments on their own, there are still instances in which the property owner believes their property is worth less.
Appraising is an opinion based on consideration of relevant facts. Differences of opinion can and do arise. Property owners have a right to challenge the assessments. The process may vary from county to county, but in general it is done by filing an application for a change in assessment with a special board appointed for this process. There may be opportunity to seek a reappraisal from the assessor’s office, eliminating the need for a formal appeal. But if not, then the property owner must file an appeal and working through that process. Property owners must still pay the assessed property taxes on time — even if they have filed an appeal. Refunds will be made in cases of decreased assessments.
Be aware there are private firms mass-mailing homeowners with offers to file appeals on their behalf. Those firms require a fee. It is not necessary to use someone else to handle an appeal. The process is fairly straight forward – and most times there is no fee to file.
Generally, the county’s website will have the forms, instructions, and in some cases how-to videos. The applications for change in assessment may be filed anytime after July 2. Depending upon the county, the applications are due by September 17 (which applies to us here in Orange County) or November 30. Property owners should carefully check when their filing is due. It is not necessary to include copies of evidence with the filing of your application. The presentation of evidence is done at a hearing.
At the hearing a determination of value will be made by either a three-member Assessment Appeals Board or a Hearing Officer. Having the case heard before a hearing officer is considered an expedient and convenient alternative to the formal Board proceedings. There may be a fee if the case is heard before the full board. Most appeals heard by the board are scheduled within twelve to eighteen months. Residential appeals heard by a Hearing Officer are scheduled within six to nine months.
At the hearing, the owner and Assessor are given opportunity to present evidence to substantiate their opinions. It is important to have current, reliable evidence supporting the property’s value. The property owner’s opinion is not good enough. Appraisals and records of comparable sales are the bare minimum. A competent real estate agent may be able to assist in gathering information. The Board or Hearing Officer will either present their decision at the conclusion of the hearing or notify the owner of their decision by mail at a later date. The decision is final.
A Final Word on Assessments and Proposition 13
Many people believe that the county cannot increase the assessed value of property more than 2% per year. This is not true. Under Proposition 13, a base-year value is established when a property changes ownership. It is that value that may not be increased more than 2% per year. In times of recession the market value of a property (the value used to determine the annual property tax) may fall below the adjusted base-year value. But that does not stop the annual increase to the base-year value. In years when the values of property are increasing, the county has the ability to increase the taxable value of the property more than 2% a year, all the way back up to the annually adjusted base-year value.
Example: Bob purchased a home in 2006 for $300,000. On January 1, 2007, the market value of the home was $400,000. Under Proposition 13, however, the increase in his base-year value was limited to 2%. So, for the 2007–08 roll, his assessed value was $306,000. In January 2011, the market value of his home had dropped to $250,000. As a result, the county assessor dropped the assessed value of his home to $250,000 for 2011–12. In January 2012, if the market value of his home increases to $300,000 (an increase of 20%), the assessed value for property tax purposes will also increase to that amount, because it is still under the base-year amount.
For links to county assessors’ offices, visit www.boe.ca.gov/proptaxes/assessors.htm.
Greg Tanner – is a Tax Principal at Wertz & Company, LLP, a Professional Services Firm located in Orange County, CA that specializes in working with entrepreneurs along their journey to success.