The Silver Lining to the Dark Cloud of Recession – Property Taxes

It is no secret that the value of your home has sunk to the murky bottom, just like the titanic did a century ago. You are so far underwater that if you had to hold your breath until values returned to where they peaked, you would be introduced as Mr./Mrs. Blue.

Across the country, property owners' property taxes are reassessed every 2 to 5 years to bring the assessed value in line with the fair market value. Here in California we have a special way of assessing taxable values, thanks to the 30-year-old amendment to the state constitution - Proposition 13. Prop 13 assesses the value at the time of purchase and then limits a tax increase to 2% per year. The upside is that as California real estate values increased by double digit numbers, year-after-year, assessed values soon fell well below the then current market values.

The effect of this landmark legislation is that those who purchased real estate near the market peaks are being unfairly assessed at values that may be double the current fair market value. Those who purchased prior to the boom are still likely to have the assessed value lag behind today's current market value.

As an example, if you purchased a home in California for $350,000 in 1995 the value today may still be a million dollars, despite it being down from the peak value of $2 million. In the meantime, the assessed value has only crept up around $100,000 in value and this year your assessed value would creep up another 2%.

On the other hand, if you bought a million dollar home in Temecula, in 2006 the value has fallen by more than half. and you should get a tax break.

KOOL-AID ANYONE?

There is a new flavor of Kool-Aid being distributed by County Assessor's, throughout the Stat of California that discourages homeowners from filing appeals to reduce the value to a more equitable market value. The Assessor's are saying not to worry about over assessed values, that they will issue reductions, across the board to reflect the change in the market. If you read my earlier post on this topic, CALIFORNIA PROPRTY TAXES: The Spider and the Fly I point out that it is in the Assessors best interest to hand out token reductions and avoiding the majority of property owners who would otherwise be entitled to a reduction, from ever filing their own appeal.

While it is true that Californians can file their own appeal they may often find more traction with a company that has established themselves in the field. I am not talking about the scams perpetrated with mass mailings charging an outrageous fee to tell you how to file the appeal yourself. Rather I am talking about legitimate companies that actually represent you through each step of the appeal process to maximize your savings, year-after-year. These professional property tax consulting firms have the advantage of a reputation with the Assessor's. Realize that the Assessor's office is made up of county workers (people) that have suffered with massive cutbacks, furlough days without pay and department lay-offs. To be frank, they don't have the resources and lack much of the motivation to work each individual appeal the way it should - the way that maximizes your reduction. The advantage the consultant brings to the table, besides their reputation for never giving up is that they only get paid when savings are achieved - so they have a very real motivation to stay on top of the process...even if it takes the two years, allowed by law.

If you would like to know more about the company I recommend to reduce your property tax liability for both commercial and residential real estate, please don't hesitate to drop me an email with the specifics of your property - either commercial or residential and I'd be glad to provide you with more details.

Please join the new ActiveRain Group for California Property Taxes - a place to research all things relating to California Property Taxes for both the homeowner, investor and commercial real estate/land owner.

To read more articles I have published about California Properyt Taxes and Prop 13, please follow this link.