I read that you can have your house reassessed if it drops below the original purchase value to a lower property tax rate. Anyone here ever heard of this?
Not that it would do any good for anyone, but heck, anything to help this country from falling apart over the next couple of years.
I did it in 1994. As I recall, it is a pretty easy process. You could save $1000 per one hundred thousand of decline. A lot of people don’t do it though, because they feel like they are surrendering.
Q: Can the assessed value of my property be decreased?
A: Yes. The assessed value of property can be decreased when ever damage occurs such as fire, or when structures are removed. State law (Proposition 8, Temporary Reduction of Assessed Value For Property Tax Purposes, passed in 1979) also allows property values to be reduced if there is a decline in market values below the current assessed value. Click here for APPLICATION FOR REVIEW OF ASSESSMENT. This document is in Acrobat PDF format.
However, some jurisdictions attempted to move the tax basis back up to the original prices, plus 2% per year once the market recovered. There was a lawsuit in Orange County in which the plaintiff claimed that prop 13 limits it to 2% increase each year after any reassessment as well. They lost.
So when things recover, the county can (and likely will) bump your taxes back up to the original basis, plus 2% per year. You can save lots of dough in the mean time, though. Happened in the OC and I also read something about it in SD, but don;t know if they focused on commercial properties only or also Joe Homeowner.
JJ- Did they bump your cost basis back up?
On a side note : This could be a proxy for market turnaround. When the U-T consistently has articles and letters in the financial section regarding lowering your property tax basis, it will be time to consider the RE market again.
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