Property Tax Bills Can Be Confusing
October 16, 2008
Property tax bills have been mailed and can be a surprise to some new homeowners - or even to some old homeowners. There are several taxpayer initiatives that have regulated property tax assessments in California since 1978. It was in 1978 that Proposition 13 was passed and the rules for the assessment of real property were radically changed. At that time, property values for existing homeowners were based on the 1975 assessed value of the property. Thereafter, on the January 1st lien date, the assessed value could be raised by an inflationary rate not to exceed 2% per year. If you have not done remodeling requiring a permit and have remained in your property, that is the formula for arriving at the assessed value.
However, Proposition 13 also requires the Assessor to appraise real property as of the date of change-in-ownership or as of the date of any new construction. When a change of ownership occurs, the Assessor receives a copy of the deed and determines if an appraisal is required under state law. If an appraisal is required, it is completed and the homeowner is notified of the new assessment and may receive a Supplemental Tax Bill for the difference between the new valuation and the January 1st valuation. Over the years the new assessed value has been based on the purchase price.
This year with houses frequently selling at prices substantially below the existing assessed value, purchasers did not expect a supplemental tax bill, but from what we are hearing, they have received one. This assessment is based on the existing assessed value as on January 1st of this year. Do you owe this bill? According to our best information, the answer is "yes". An appeal can be made and adjustments may occur, but for the present, the decline in market value is causing a bit of confusion for Assessor's offices and for homeowners. A word of advice: don't ignore the supplemental bill. If you receive a regular bill and a supplemental, avoid the penalties and accruing interest by paying.
We are clearly experiencing a case of "unintended consequences".
Property tax bills have been mailed and can be a surprise to some new homeowners - or even to some old homeowners. There are several taxpayer initiatives that have regulated property tax assessments in California since 1978. It was in 1978 that Proposition 13 was passed and the rules for the assessment of real property were radically changed. At that time, property values for existing homeowners were based on the 1975 assessed value of the property. Thereafter, on the January 1st lien date, the assessed value could be raised by an inflationary rate not to exceed 2% per year. If you have not done remodeling requiring a permit and have remained in your property, that is the formula for arriving at the assessed value.
However, Proposition 13 also requires the Assessor to appraise real property as of the date of change-in-ownership or as of the date of any new construction. When a change of ownership occurs, the Assessor receives a copy of the deed and determines if an appraisal is required under state law. If an appraisal is required, it is completed and the homeowner is notified of the new assessment and may receive a Supplemental Tax Bill for the difference between the new valuation and the January 1st valuation. Over the years the new assessed value has been based on the purchase price.
This year with houses frequently selling at prices substantially below the existing assessed value, purchasers did not expect a supplemental tax bill, but from what we are hearing, they have received one. This assessment is based on the existing assessed value as on January 1st of this year. Do you owe this bill? According to our best information, the answer is "yes". An appeal can be made and adjustments may occur, but for the present, the decline in market value is causing a bit of confusion for Assessor's offices and for homeowners. A word of advice: don't ignore the supplemental bill. If you receive a regular bill and a supplemental, avoid the penalties and accruing interest by paying.
We are clearly experiencing a case of "unintended consequences".
posted by shirley harry at 8:24 AM
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