Property Tax Relief: Really? Find out the Truth about Lower Property Taxes
Prop 8 Reduction is a supplement or exemption to Prop 13 which still applies today to all property owners in California. Prop 13 was enacted in 1978 to limit the amount of property taxes paid by homeowners. Prop 8 Reduction is an exemption to Prop 13 which states that your assessed value should not be higher than market value for any given year. So, when the market is going down like it is today and has dipped below your current assessed value, you are entitled to some relief.
Seems like great news but, it is only a SHORT TERM answer. The Prop 8 Exemption is something you have to file for most of the time. Sometimes the Assessor will automatically lower your property taxes because he is an elected official and will do what he can to maintain voter approval. Prop 8 works is like this: your date for any fiscal year is January 1st for assessment purposes. The comparable sales for your home for need to have closed within the first quarter of the given year; January 1 to March 31 based on the language of the law. So to get a The Prop 8 Exemption reduction for 2009, the comparables must have closed between January 1st, 2009 and March 31, 2009. To get this reduction in value there has to be comparable sales of homes similar to yours within the first quarter of the designated year that are lower than your assessed value for that year. If there are no comparable sales that show a lower value for your home during that first quarter, your are out of luck.
The problem here has many reasons: one of the worst is that the first three months of the year is the slowest time for comparable sales because those tranactions started during the holiday season which is the slowest time for real estate. Real estate sales take 30-60 days to close, so most of the sales that close within the first quarter of the year opened escrow during the holiday season. The sales to choose from are more sparse than later on. When the market movement really starts to show during the second and third quarters of the year you are out of luck because those sales are outside the perimeters for a Prop 8 reduction.
This is not the best solution because it is only a TEMPORARY reduction in value, so when the market starts to climb back up, and it always does, your old base value gets restored to what it would have been had you never gotten the reduction. Many property tax specialists appear in declining markets claiming to be able to save you on property taxes. They send mailers that look like they are from the Assessor which they are not and sadly, taxpayers pay good money to have their taxes "lowered" only to have their tax bills revert to higher rates once the market recovers. Truthfully you never pay the Assessor for any service or review of your value - you pay for that with your property taxes already!
A typical example of a Prop 8 Exemption on an average home in California. So, I purchased a home in 2005, at the hight of the market, for $500,000, at a 2% trend my current assessed value for 2008 is $530,604. My market value as of the first of 2008 is around $430,000 and as a knowledgeable tax payer I apply for a Prop 8 Decline in Value to get a break. So, for 2008 I have a nice break, Im paying property taxes on a value that is $100,000 below my trended base value and saving close to $1,250! The real estate market goes down and based on the Assessors review, the Prop 8 Exemption value is still given for 2009. So for 2009 I am paying based on the $430,000 which is even better this year since my trended base in 2009 would have been $541,216 and so I am saving near $1,390! Awesome!
Well, the market starts to turn around, and the values are climbing and for 2010 my market value is around $500,000, so the Assessor adjusts my Prop 8 Decline value to $500,000 which is lower than my 2010 trended base value of $552,040. Definitely not as great as having $430,000 as my assessed value. However, I am still saving and this year since my Prop 8 Reduction value is $52,000 lower than my trended base value I am now saving $650 a year in paid taxes. Well, for 2011 the market is skyrocketing gain and now my market value is somewhere around $600,000 and so the assessor restores my value to the trended base, which for this year is $563,080. So, I am now paying $7,038 in taxes. I wish I still had that $430,000 base
California Property Tax Law offers a way to PERMANENTLY reduce your property taxes with today's declining real estate market, based on Prop 13 and essentially avoiding the Prop 8 Exemption and all of its limitations. In addition, find out how to avoid reassessment when you inherit property and how to use the exemptions allowed by Current Property Tax Law to your maximum advantage.
About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com
Seems like great news but, it is only a SHORT TERM answer. The Prop 8 Exemption is something you have to file for most of the time. Sometimes the Assessor will automatically lower your property taxes because he is an elected official and will do what he can to maintain voter approval. Prop 8 works is like this: your date for any fiscal year is January 1st for assessment purposes. The comparable sales for your home for need to have closed within the first quarter of the given year; January 1 to March 31 based on the language of the law. So to get a The Prop 8 Exemption reduction for 2009, the comparables must have closed between January 1st, 2009 and March 31, 2009. To get this reduction in value there has to be comparable sales of homes similar to yours within the first quarter of the designated year that are lower than your assessed value for that year. If there are no comparable sales that show a lower value for your home during that first quarter, your are out of luck.
The problem here has many reasons: one of the worst is that the first three months of the year is the slowest time for comparable sales because those tranactions started during the holiday season which is the slowest time for real estate. Real estate sales take 30-60 days to close, so most of the sales that close within the first quarter of the year opened escrow during the holiday season. The sales to choose from are more sparse than later on. When the market movement really starts to show during the second and third quarters of the year you are out of luck because those sales are outside the perimeters for a Prop 8 reduction.
This is not the best solution because it is only a TEMPORARY reduction in value, so when the market starts to climb back up, and it always does, your old base value gets restored to what it would have been had you never gotten the reduction. Many property tax specialists appear in declining markets claiming to be able to save you on property taxes. They send mailers that look like they are from the Assessor which they are not and sadly, taxpayers pay good money to have their taxes "lowered" only to have their tax bills revert to higher rates once the market recovers. Truthfully you never pay the Assessor for any service or review of your value - you pay for that with your property taxes already!
A typical example of a Prop 8 Exemption on an average home in California. So, I purchased a home in 2005, at the hight of the market, for $500,000, at a 2% trend my current assessed value for 2008 is $530,604. My market value as of the first of 2008 is around $430,000 and as a knowledgeable tax payer I apply for a Prop 8 Decline in Value to get a break. So, for 2008 I have a nice break, Im paying property taxes on a value that is $100,000 below my trended base value and saving close to $1,250! The real estate market goes down and based on the Assessors review, the Prop 8 Exemption value is still given for 2009. So for 2009 I am paying based on the $430,000 which is even better this year since my trended base in 2009 would have been $541,216 and so I am saving near $1,390! Awesome!
Well, the market starts to turn around, and the values are climbing and for 2010 my market value is around $500,000, so the Assessor adjusts my Prop 8 Decline value to $500,000 which is lower than my 2010 trended base value of $552,040. Definitely not as great as having $430,000 as my assessed value. However, I am still saving and this year since my Prop 8 Reduction value is $52,000 lower than my trended base value I am now saving $650 a year in paid taxes. Well, for 2011 the market is skyrocketing gain and now my market value is somewhere around $600,000 and so the assessor restores my value to the trended base, which for this year is $563,080. So, I am now paying $7,038 in taxes. I wish I still had that $430,000 base
California Property Tax Law offers a way to PERMANENTLY reduce your property taxes with today's declining real estate market, based on Prop 13 and essentially avoiding the Prop 8 Exemption and all of its limitations. In addition, find out how to avoid reassessment when you inherit property and how to use the exemptions allowed by Current Property Tax Law to your maximum advantage.
About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com
About the Author:
Don't miss your copy of the FREE ebook written by Valerie Faltas, Property Tax Expert today! lower property taxes, prop 8, prop 13, property tax secrets, property tax loophole, assessment, assessor