RE Proposition 8 – The Decline-in-value Reassessment

California Real Estate owners are aware that property values have declined in value over the past two years, however, as a property owner, are you aware of the California constitutional amendment passed in 1978, known as Prop 8 that allows property owners to reduce their assessed value in declining real estate markets?

Lowering your property’s assessed value means paying less property tax.

We all want lower taxes- so…. what do you have to do to take advantage of Prop 8?

You need to fill out a Decline-in-Value Reassessment:

http://assessor.lacounty.gov/extranet/lac/control/binaryget.aspx?uploadid=193

Make sure you submit the form before this year’s deadline of December 31^st 2009. Applications may be submitted without two comparable sales to support your opinion of value. If you send in an application without two comparable sales the assessor will look up the comparable sales for you. The comparable sales must have occurred between January 1 and March 31^st of 2009. I would strongly recommend you provide 2 comparable sales with your application, because this will allow you to select comparable sales that will be to your advantage.

You can search for comparable sales yourself using the assessor’s database here:

http://maps.assessor.lacounty.gov/mapping/viewer.asp

….Or you can ask your local real estate agent or title rep to help you find them. If you would like my assistance preparing your application and finding the best 2 comp’s call James Colin Campbell at 310-388-7332 or email me at jamescampbell@coldwellbanker.com DRE#01817777

Once your application is submitted an appraiser will review the information and make a decision. It is important to understand that filing a Prop 8 can never hurt you by making your taxes higher. Let me explain why:

*If the current market value for your home is greater than Base Value trended, no change in assessed value will be made.

Example

A property was purchased for $500,000. During a three-year period, the real estate market declined and recovered. The property owner filed for a decline-in-value reassessment. The following table shows the trended base value of the property, the market value of the property, and the assessed value of the property. Assuming a 2% Annual C.P.I.:   Base Value Trended Market Value Assessed Value Year 1 $500,000 $500,000 $500,000 Year 2 $510,000 $480,000 $480,000 Year 3 $520,200 $510,000 $510,000 Year 4 $530,604 $550,000 $530,604

Because you can never exceed your base value trended, you only stand to lower your taxes by attempting to adjust your assessed value. In the example above, if you had not filed a prop 8 in year 2 you would have been taxed on an assessed value of $510,000 instead of $480,000, assuming a 1% property tax on the $30,000 difference in assessment, you save $300 in year 2.

You may file a Prop 8 every year (although in a rising market there is no benefit) and your base year trended values increases by an annual inflation factor of no more than 2% per year.

Visit this helpful link to learn even more about prop 8

http://assessor.lacounty.gov/extranet/guides/prop8.aspx