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How to lower your real property tax assessment--at least for now

Posted by attorney Daniel Gonzales

"Summer's here, and the time is right for..."

Dancing in the streets?

So the song says, but there’s something else: Real property tax assessment appeals. If you own real estate, you may already be thinking about this subject as the result of a mailing you will have received from the Assessor's Office notifying you of the assessed value of your property.

Ever since the financial crisis of 2008, with very few exceptions, real estate values across California and the rest of the country have plunged dramatically. While a fortunate few whose property holdings are in prized locations have recently been enjoying increased real estate prices, most people are still facing falling values. Although the Assessor's Office has taken an active role in identifying areas of falling values and lowering assessments accordingly, your own property may remain overvalued, thus increasing your property taxes.

If you believe that the value of your existing real estate has fallen below the assessed value shown on your notice, you have two options to seek a temporary reduction in assessed value.

First, you can contact the Assessor's Office and request an informal review. At this review, you can present all factual information relevant to the determination of the property's market value as of January 1, 2012. But don’t delay: The deadline for requesting this informal review is August 1, 2012.

Second, you can file a formal assessment appeal with the Clerk of the Appeals Board; in Santa Clara County, the Clerk of the Board of Supervisors serves this role. For each tax period that you challenge, your appeal requires the submission of a signed appeal form. You can file this formal assessment appeal between July 2 and September 15, 2012.

Whichever option you pursue, you should submit the most persuasive information available to convince the Assessor's Office of your opinion of your property’s value. So come prepared with facts and figures from reputable sources. Remember, the Assessor's Office has access to all sales information in the county, and its opinion of value is presumed correct unless you have sufficient evidence to show it to be in error. Professional appraisals are the most effective evidence, with realtors' opinions carrying somewhat less weight. Less persuasive forms of information include newspaper articles and websites, as well as your own opinion of value.

The following is a link to a booklet prepared by the State Board of Equalization that describes the assessment appeals process. While it specifically addresses assessment appeals of residential property, the principles it describes apply to all real property assessment appeals:

http://www.sccgov.org/sites/bos/cob/Assessment-Appeals/Documents/Clerk%20of%20the%20Board%20of%20SupervisorsAssessment%20Appealspub30.pdf

Keep in mind that while you challenge the assessment, you must still pay your assessed property tax. If your appeal is successful, however, you will receive a refund.

If you succeed in obtaining a temporary reduction, the Assessor's Office will review the property's value annually against the "factored base year value," which is the original assessed value of the property, increased by up to two percent per year. As the real estate market recovers, the assessed value of your property will be increased based on market conditions, free from the two percent annual limit, until the assessed value of the property reaches its factored base year value.

It is important to evaluate whether the cost of making a persuasive case for a lowered assessment (e.g., appraisal fees, attorneys’ fees, etc.) is warranted by the tax savings. For example, if your property is assessed at $1,000,000, but its value can be shown to be $900,000, your property taxes would be reduced from approximately $10,000 to approximately $9,000, a difference of $1,000; given the temporary nature of the tax savings, you would want to think hard about incurring more than $1,000 in making your case for a reduction.

Please note as well that newly-acquired real estate is subject to different procedures and deadlines under the change in ownership assessment provisions of Proposition 13. If it is still unclear to you whether an assessment challenge is the right choice for your circumstances, you should speak with a lawyer to review your options.

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