Property tax confusion for houses that sell for much less than what owner paid

[patientlywaiting]

jonnycsd, thanks for the link. I didn’t know that the assessment increase were based on the CPI.

I guess that if the CPI were 2% but property values were stagnant the Assessor could increase assessed values. But that would conflict with Prop 8 which allows homeowners to appeal their assessed value back to market.

Do you want to take a crack at reading the language of Prop 8?

[noone]

dharmagirl, I’m glad you asked this. I was wondering the same thing a few weeks ago. I found a thread from last year (http://piggington.com/taxes_re_assessed_or_not_after_buying_below_assessed_value) where it was stated pretty matter-of-factly that it would be re-assessed at the new sale price. So I thought I had my answer. But the answers on this thread seem to indicate that the assessor may not necessarily use the new sale price as the new assessed value. I guess that’s why the answers on blogs always require further research.

Maybe a “Steak of the Month” subscription for the assessor will push them in the right direction.

Unless they are vegan…

[noone]

dharmagirl, I’m glad you asked this. I was wondering the same thing a few weeks ago. I found a thread from last year (http://piggington.com/taxes_re_assessed_or_not_after_buying_below_assessed_value) where it was stated pretty matter-of-factly that it would be re-assessed at the new sale price. So I thought I had my answer. But the answers on this thread seem to indicate that the assessor may not necessarily use the new sale price as the new assessed value. I guess that’s why the answers on blogs always require further research.

Maybe a “Steak of the Month” subscription for the assessor will push them in the right direction.

Unless they are vegan…

[noone]

dharmagirl, I’m glad you asked this. I was wondering the same thing a few weeks ago. I found a thread from last year (http://piggington.com/taxes_re_assessed_or_not_after_buying_below_assessed_value) where it was stated pretty matter-of-factly that it would be re-assessed at the new sale price. So I thought I had my answer. But the answers on this thread seem to indicate that the assessor may not necessarily use the new sale price as the new assessed value. I guess that’s why the answers on blogs always require further research.

Maybe a “Steak of the Month” subscription for the assessor will push them in the right direction.

Unless they are vegan…

[noone]

dharmagirl, I’m glad you asked this. I was wondering the same thing a few weeks ago. I found a thread from last year (http://piggington.com/taxes_re_assessed_or_not_after_buying_below_assessed_value) where it was stated pretty matter-of-factly that it would be re-assessed at the new sale price. So I thought I had my answer. But the answers on this thread seem to indicate that the assessor may not necessarily use the new sale price as the new assessed value. I guess that’s why the answers on blogs always require further research.

Maybe a “Steak of the Month” subscription for the assessor will push them in the right direction.

Unless they are vegan…

[noone]

dharmagirl, I’m glad you asked this. I was wondering the same thing a few weeks ago. I found a thread from last year (http://piggington.com/taxes_re_assessed_or_not_after_buying_below_assessed_value) where it was stated pretty matter-of-factly that it would be re-assessed at the new sale price. So I thought I had my answer. But the answers on this thread seem to indicate that the assessor may not necessarily use the new sale price as the new assessed value. I guess that’s why the answers on blogs always require further research.

Maybe a “Steak of the Month” subscription for the assessor will push them in the right direction.

Unless they are vegan…

[noone]

dharmagirl, I’m glad you asked this. I was wondering the same thing a few weeks ago. I found a thread from last year (http://piggington.com/taxes_re_assessed_or_not_after_buying_below_assessed_value) where it was stated pretty matter-of-factly that it would be re-assessed at the new sale price. So I thought I had my answer. But the answers on this thread seem to indicate that the assessor may not necessarily use the new sale price as the new assessed value. I guess that’s why the answers on blogs always require further research.

Maybe a “Steak of the Month” subscription for the assessor will push them in the right direction.

Unless they are vegan…

[CA renter]

From what I understand, Prop 13 limits the assessment to the full cash value of the property when purchased. After purchase, the assessment can go up no more than 2% each and every year (compounded, if I understand correctly).

In addition to the basic property tax, the voters can vote for additional bonds, etc. to be used for local services. Theoretically, this puts revenues for expenditures in the taxpayers’ hands — which I think is 100% correct. If the public can be convinced that there is a REAL need for additional money for schools, infrastructure, etc., they can always vote that in.

FWIW, the confusion about Prop 13 might explain why so many people complain about it. In reality, Prop 13 is one of the best things that could have happened in CA. The history behind it is informative. For those who are new to California, price volatility is the norm here, and Prop 13 was overwhelmingly voted into law to protect people from being “taxed out of their homes” by speculators and housing bubbles.

I’ve always said that buyers should consider total PITI payments when buying. If enough buyers were smart enough to refrain from buying when prices were too high, they could stop complaining about the disparity between what old-timers pay and what new buyers pay. The buyers have no one to blame but themselves — for over-paying in the first place, IMHO.
——————–

CALIFORNIA CONSTITUTION
ARTICLE 13A [TAX LIMITATION]

SEC. 2. (a) The “full cash value” means the county assessor’s
valuation of real property as shown on the 1975-76 tax bill under
“full cash value” or, thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership
has occurred after the 1975 assessment.

http://www.leginfo.ca.gov/.const/.article_13A

more background info:

http://igs.berkeley.edu/library/htTaxSpendLimits2003.html

[CA renter]

From what I understand, Prop 13 limits the assessment to the full cash value of the property when purchased. After purchase, the assessment can go up no more than 2% each and every year (compounded, if I understand correctly).

In addition to the basic property tax, the voters can vote for additional bonds, etc. to be used for local services. Theoretically, this puts revenues for expenditures in the taxpayers’ hands — which I think is 100% correct. If the public can be convinced that there is a REAL need for additional money for schools, infrastructure, etc., they can always vote that in.

FWIW, the confusion about Prop 13 might explain why so many people complain about it. In reality, Prop 13 is one of the best things that could have happened in CA. The history behind it is informative. For those who are new to California, price volatility is the norm here, and Prop 13 was overwhelmingly voted into law to protect people from being “taxed out of their homes” by speculators and housing bubbles.

I’ve always said that buyers should consider total PITI payments when buying. If enough buyers were smart enough to refrain from buying when prices were too high, they could stop complaining about the disparity between what old-timers pay and what new buyers pay. The buyers have no one to blame but themselves — for over-paying in the first place, IMHO.
——————–

CALIFORNIA CONSTITUTION
ARTICLE 13A [TAX LIMITATION]

SEC. 2. (a) The “full cash value” means the county assessor’s
valuation of real property as shown on the 1975-76 tax bill under
“full cash value” or, thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership
has occurred after the 1975 assessment.

http://www.leginfo.ca.gov/.const/.article_13A

more background info:

http://igs.berkeley.edu/library/htTaxSpendLimits2003.html

[CA renter]

From what I understand, Prop 13 limits the assessment to the full cash value of the property when purchased. After purchase, the assessment can go up no more than 2% each and every year (compounded, if I understand correctly).

In addition to the basic property tax, the voters can vote for additional bonds, etc. to be used for local services. Theoretically, this puts revenues for expenditures in the taxpayers’ hands — which I think is 100% correct. If the public can be convinced that there is a REAL need for additional money for schools, infrastructure, etc., they can always vote that in.

FWIW, the confusion about Prop 13 might explain why so many people complain about it. In reality, Prop 13 is one of the best things that could have happened in CA. The history behind it is informative. For those who are new to California, price volatility is the norm here, and Prop 13 was overwhelmingly voted into law to protect people from being “taxed out of their homes” by speculators and housing bubbles.

I’ve always said that buyers should consider total PITI payments when buying. If enough buyers were smart enough to refrain from buying when prices were too high, they could stop complaining about the disparity between what old-timers pay and what new buyers pay. The buyers have no one to blame but themselves — for over-paying in the first place, IMHO.
——————–

CALIFORNIA CONSTITUTION
ARTICLE 13A [TAX LIMITATION]

SEC. 2. (a) The “full cash value” means the county assessor’s
valuation of real property as shown on the 1975-76 tax bill under
“full cash value” or, thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership
has occurred after the 1975 assessment.

http://www.leginfo.ca.gov/.const/.article_13A

more background info:

http://igs.berkeley.edu/library/htTaxSpendLimits2003.html

[CA renter]

From what I understand, Prop 13 limits the assessment to the full cash value of the property when purchased. After purchase, the assessment can go up no more than 2% each and every year (compounded, if I understand correctly).

In addition to the basic property tax, the voters can vote for additional bonds, etc. to be used for local services. Theoretically, this puts revenues for expenditures in the taxpayers’ hands — which I think is 100% correct. If the public can be convinced that there is a REAL need for additional money for schools, infrastructure, etc., they can always vote that in.

FWIW, the confusion about Prop 13 might explain why so many people complain about it. In reality, Prop 13 is one of the best things that could have happened in CA. The history behind it is informative. For those who are new to California, price volatility is the norm here, and Prop 13 was overwhelmingly voted into law to protect people from being “taxed out of their homes” by speculators and housing bubbles.

I’ve always said that buyers should consider total PITI payments when buying. If enough buyers were smart enough to refrain from buying when prices were too high, they could stop complaining about the disparity between what old-timers pay and what new buyers pay. The buyers have no one to blame but themselves — for over-paying in the first place, IMHO.
——————–

CALIFORNIA CONSTITUTION
ARTICLE 13A [TAX LIMITATION]

SEC. 2. (a) The “full cash value” means the county assessor’s
valuation of real property as shown on the 1975-76 tax bill under
“full cash value” or, thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership
has occurred after the 1975 assessment.

http://www.leginfo.ca.gov/.const/.article_13A

more background info:

http://igs.berkeley.edu/library/htTaxSpendLimits2003.html

[CA renter]

From what I understand, Prop 13 limits the assessment to the full cash value of the property when purchased. After purchase, the assessment can go up no more than 2% each and every year (compounded, if I understand correctly).

In addition to the basic property tax, the voters can vote for additional bonds, etc. to be used for local services. Theoretically, this puts revenues for expenditures in the taxpayers’ hands — which I think is 100% correct. If the public can be convinced that there is a REAL need for additional money for schools, infrastructure, etc., they can always vote that in.

FWIW, the confusion about Prop 13 might explain why so many people complain about it. In reality, Prop 13 is one of the best things that could have happened in CA. The history behind it is informative. For those who are new to California, price volatility is the norm here, and Prop 13 was overwhelmingly voted into law to protect people from being “taxed out of their homes” by speculators and housing bubbles.

I’ve always said that buyers should consider total PITI payments when buying. If enough buyers were smart enough to refrain from buying when prices were too high, they could stop complaining about the disparity between what old-timers pay and what new buyers pay. The buyers have no one to blame but themselves — for over-paying in the first place, IMHO.
——————–

CALIFORNIA CONSTITUTION
ARTICLE 13A [TAX LIMITATION]

SEC. 2. (a) The “full cash value” means the county assessor’s
valuation of real property as shown on the 1975-76 tax bill under
“full cash value” or, thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership
has occurred after the 1975 assessment.

http://www.leginfo.ca.gov/.const/.article_13A

more background info:

http://igs.berkeley.edu/library/htTaxSpendLimits2003.html

[temeculaguy]

Only the 1% is based on value, the .2 can be a fixed amount per lot so the tax rate can actually be a higher percentage while still being a lower bill with a lower purchace price.

200k home 1.8 rate=3600 yr (2k for value per prop 13 and 1600 total in voter approved bonds, csa, etc.)

same home sells for 400k a few years later, tax goes up to 4000 for value (1%) but 1600 stays the same for the bonds, etc. so the rate is now less than 1.8 (5600 tax on 400k home more like 1.4)

when it sells for 600k, tax is 7600, guess what 1.2 tax rate, so if it sells as a repo for 300k you want to use the 1.2 to figure the tax at 3600 but that wont be what it ends up, it will be 4600 (3000 for value plus 1600 fixed) so the rate isn’t always constant. prop 13 held taxed to 1% of the value plus any voter approved taxes (by 2/3 vote) above that and mello roos if applicable but they are not always value based, often based per dwelling. In my area, trash is included in property taxes but it is a fixed bill per house not value based, that is one example of fixed additions to the tax bill that can throw off the percentage theory, street lights can be another ($50 a year per house if they have them, free if it is an area that doesn’t have them). It is actually a more fair way to pay, just because you bought your house for more doesn’t mean you should pay more for trash, your share of the street lights or your cut of a school or sewer bond, especially if you don’t have sewer or street lights where you are.

You need to see the actual tax bill itemized to determine how much is value based and how much is fixed, assessor websites can sometime provide that info very easily.

[temeculaguy]

Only the 1% is based on value, the .2 can be a fixed amount per lot so the tax rate can actually be a higher percentage while still being a lower bill with a lower purchace price.

200k home 1.8 rate=3600 yr (2k for value per prop 13 and 1600 total in voter approved bonds, csa, etc.)

same home sells for 400k a few years later, tax goes up to 4000 for value (1%) but 1600 stays the same for the bonds, etc. so the rate is now less than 1.8 (5600 tax on 400k home more like 1.4)

when it sells for 600k, tax is 7600, guess what 1.2 tax rate, so if it sells as a repo for 300k you want to use the 1.2 to figure the tax at 3600 but that wont be what it ends up, it will be 4600 (3000 for value plus 1600 fixed) so the rate isn’t always constant. prop 13 held taxed to 1% of the value plus any voter approved taxes (by 2/3 vote) above that and mello roos if applicable but they are not always value based, often based per dwelling. In my area, trash is included in property taxes but it is a fixed bill per house not value based, that is one example of fixed additions to the tax bill that can throw off the percentage theory, street lights can be another ($50 a year per house if they have them, free if it is an area that doesn’t have them). It is actually a more fair way to pay, just because you bought your house for more doesn’t mean you should pay more for trash, your share of the street lights or your cut of a school or sewer bond, especially if you don’t have sewer or street lights where you are.

You need to see the actual tax bill itemized to determine how much is value based and how much is fixed, assessor websites can sometime provide that info very easily.

[temeculaguy]

Only the 1% is based on value, the .2 can be a fixed amount per lot so the tax rate can actually be a higher percentage while still being a lower bill with a lower purchace price.

200k home 1.8 rate=3600 yr (2k for value per prop 13 and 1600 total in voter approved bonds, csa, etc.)

same home sells for 400k a few years later, tax goes up to 4000 for value (1%) but 1600 stays the same for the bonds, etc. so the rate is now less than 1.8 (5600 tax on 400k home more like 1.4)

when it sells for 600k, tax is 7600, guess what 1.2 tax rate, so if it sells as a repo for 300k you want to use the 1.2 to figure the tax at 3600 but that wont be what it ends up, it will be 4600 (3000 for value plus 1600 fixed) so the rate isn’t always constant. prop 13 held taxed to 1% of the value plus any voter approved taxes (by 2/3 vote) above that and mello roos if applicable but they are not always value based, often based per dwelling. In my area, trash is included in property taxes but it is a fixed bill per house not value based, that is one example of fixed additions to the tax bill that can throw off the percentage theory, street lights can be another ($50 a year per house if they have them, free if it is an area that doesn’t have them). It is actually a more fair way to pay, just because you bought your house for more doesn’t mean you should pay more for trash, your share of the street lights or your cut of a school or sewer bond, especially if you don’t have sewer or street lights where you are.

You need to see the actual tax bill itemized to determine how much is value based and how much is fixed, assessor websites can sometime provide that info very easily.

[Author]

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