Prop 8 - Reducing Your Property Tax Burden in Riverside County

If you purchased a home in Riverside County between 1998 and 2001 you saw the value of that property shoot up by nearly 155% before the cooling trend started in 2007. That means a home purchased in 2001 for $300,000 may have sold for as much as $765,000 at peak value. That same home today might fetch $475,000. While that’s still a return of better than 50%, it doesn’t do much to dampen the shock experienced by many of you and does nothing to alleviate the pain of those who purchased a home after 2004.

While the Federal Government argues about how much of your money they’re going to give to whom to bail out whomever, the County of Riverside has quietly stepped up with a more immediate solution. The program they have implemented won’t save your home from foreclosure, but it can provide a little needed relief on your tax bill.

Announced amid little fanfare last April by Riverside County Tax Assessor Larry Ward, the measure is called Proposition 8. Its intent is to provide some tax relief for people who have seen the value of their homes plummet, especially those who purchased during the peak years of 2005 and 2006. According to Ward, Proposition 8 “is not designed to save homeowners who are in hot water over mortgages they can’t afford. Rather, the measure is designed to make sure everyone pays their fair share of the tax burden. No less, but no more either. We will aggressively pursue reductions that are warranted.”

With a county tax rate at just over 1%, a homeowner who has experienced a decline in value of $50,000 will see an annual adjustment to their tax bill of between $525 and $600 dollars. For some owners, this reduction could amount to a few thousand dollars a year.

So what’s the catch? There isn’t one as long as you meet the criterion. If you are a homeowner and you suspect your property value has declined, you can submit a ‘Decline–in-Value Reassessment Application’ anytime prior to December 31, 2008.  This simple one page form includes your name and property ID along with space to submit two comparable sales to support your opinion of value. Since the reassessment is for your value base as of January 1, 2008, the comps should be for properties that are as nearly identical to your home as possible and should have sold as close to January 1, 2008 as possible, but no later than March 31, 2008.

An appraiser will review your application and the information you provide. They may also consider other sales information available to the Assessor so don’t just try to low-ball them with a couple comps you heard about over a few beers. That won’t fly. Make your information as accurate as possible and contact your Realtor if you need assistance.

If they determine that the market value as of January 1 is less than the factored Prop. 13 values, your assessment will be lowered to the market value for the fiscal year beginning July 1. You will not need to re-apply every year unless your property values take another huge drop next year – an unlikely occurrence.  The Assessor will review your market value every year on the lien date until such time as the market value returns to par with your factored base year value. Until that time your tax assessment may revise upward or downward in excess of the Prop.13 index.

While Prop 8 is applicable to every owner of a single family home, not everyone will qualify. Your home’s market value must be less than the current assessed value in order to benefit from Prop 8 and that doesn’t fit every home. If you bought in 2001 for $300,000 your current assessed value will still be shy of $350,000 despite the home having had a market value double that in 2005. Even if it appraised at $650,000 and you refinanced at that amount, your tax valuation will still reflect the Prop 13 basis and you would likely not qualify for relief under Prop 8.

However, if you purchased your home in 2006 for $575,000 and two models just like it sold for $450,000 last month, you are a probable candidate to save $1,200 to $1,500 on your taxes next year.

While there are companies that have set up to assist you with this process and will lighten you up some percentage of your savings, the service is FREE from the County Assessor. It’s a simple one page form and the website comes complete with a Q & A as well as a PowerPoint Presentation on the process, how to do it yourself and who to contact for more information. All this information is available at http://www.riversidetaxinfo.com/. This may not be the light at the end of the tunnel yet, but it’ll help buy a few batteries to light the way there.