If you have been foolish enough to buy in the past four years (like me), your property value has probably fallen. If so, you can likely benefit by appealing your tax assessment. In my case, the value has fallen 25% since I bought at the peak (hey, I’m an economist, what did you expect?), and I recently got a comensurate drop in my tax assessment. The Assessor’s Office agreed to send me a check for my past overpayments in a few months, and keep my assessment down as long as the value stays down.
Herewith a summary of how to do the same. First, a bit about how property taxes work.
Your property tax, based on 1978’s Proposition 13, is supposed to be limited to 1% of its value. (The 1% rule now includes voter-approved bonded debt payments, and is stretched to about 1.15% or so.) Another protection limits the increase in your assessment to 2% per year–a great benefit during those years of 10 – 20% growth in values. Additions to your property that add to its value allow the Assessor to bump the assessment up by the market value of the enhancement.
You receive a tax assessment statement annually that says what they believe your property is worth on January 1 of that year. Your actual tax bill follows by a few months, telling you what to pay in December (can pay half then and half the following April 10). You can appeal that Jan. 1 assessment anytime thereafter until late November (I believe Nov. 20), of that same year.
The form can be obtained on-line or at the County Administration building on Harbor Drive, where the clerks are very helpful and friendly and the parking free.
Here is where you invest the hours necessary to make a good claim and back it up thoroughly with similar comps to prove your case. You will have to become a bit of an appraiser yourself, a useful skill anyway in buying and selling property. Lean on your broker for appropriate data, and don’t forget them when you are next a buyer or seller.
Here’s the most important point of this whole exposition: The Assessor only wants sale comparables CLOSE TO JAN. 1 of this year! Forget the house next door to you that just sold for 10% less than it was worth on Jan. 1. In general, they say they want only the previous 3 months of comps. However you can likely bend that rule a bit using
1. Comps earlier than 3 months prior to Jan. 1 since it has been a steadily falling market, and
2. Comps a month or two after Jan. 1 since the deals were likely made around Jan. 1.
Once you have completed the one-page form and abundant supporting evidence, submit it and wait two years.
Yep, they have up to two years to answer it, and are so flooded with appeals that they will take almost all that time (1 3/4 years in my case) to give you an answer.
In over 90% of the appeals, the answer will be a friendly call from the Assessor’s Office offering a deal. You can accept it with a formal “stipulation” and never go to the Hearing in a quasi-judicial conference room on Harbor Drive. In my appeal they fully accepted my number so I had nothing to argue about. I strongly suspect, since they are so flooded with appeals, that if someone turned down their offer, they would come back with a better number.
Phew, didn’t expect this to be so long. But since you’ve read this far, maybe you are one who can help yourself recoup some of the property value decline you’ve experienced. Would like to have input from other Piggs who have appealed their tax assessment.