5 things to know about 2013 property taxes

There are going to be many property owners in for a rude awakening come next week when they find out how much their property taxes increased. We all love it when real estate values go up, but one of the unfortunate byproducts is increased taxes – especially for those who had their property assessments lowered by the Assessor’s Office in recent years.

There is so much bad and dishonest conflicting information out there about property taxes in Sacramento County, so I want to help clear some of that up by giving accurate insight based on my expertise with the property tax appeals process.

Five things you should know about property taxes in 2013:

  1. Image-purchased-by-Sacramento-Appraisal-Blog-and-used-with-permissionWhen can you appeal? The formal period to dispute 2013 property taxes in Sacramento County will be open from July 2, 2013 to December 2, 2013.
  2. How can you find out your 2013 assessed value? You can look up your 2013 assessment here on the Assessor’s website in early July 2013. Keep in mind the assessed value is supposed to be based on January 1, 2013 (NOT the current market). If the value looks too high, then I recommend appealing if it makes enough sense for you. Every $10,000 of assessment equals about $100-125 out of your pocket, so it’s important to understand how much you are over-assessed to determine whether it’s worth it or not to pursue the appeals process. I usually recommend property owners to pursue an appeal if they are assessed more than $30,000 too high. The bulk of people I’ve assisted are usually assessed between $50,000 to $100,000 too high (my record was 1.5 million on a piece of land).
  3. Who will pay more in taxes this year? Since the market increased last year, mostly all property owners will have a typical 2% increase in taxes to account for inflation, but there will also be MANY property owners who have their taxes adjusted upward by 10-15% easily. The Assessor can only inflate taxes by basically 2% each year under normal circumstances, but for property owners who received a “Prop 8 temporary reduction” over the past several years, their property taxes can be raised any amount each year so long as it is not increased above the original “base-year value” (called the “Prop 13 value” – which is usually the original purchase price level from years ago). This essentially means many home owners will be paying hundreds of dollars more this year – and they didn’t even see it coming.
  4. image purchased from 123rf dot com and used with permission - Sacramento Appraisal Blog - smallerWhich form should you fill out? This confuses so many people, so read closely. There are actually two forms you can fill out during the appeals process. There is a free form called the “Prop 8 Decline in Value” form. It is NOT an appeal, but you might be able to get results still by asking the Assessor to review your property for free. If you do not hear back from the Assessor’s office by October though, I highly recommend filing a formal appeal (cost is $30) so you have recourse as a property owner after the appeals deadline on December 2 has passed. I cannot emphasize how important it is to know the distinction between these two forms. Please take a few minutes to watch the video below for more information. This can save you and your contacts money.
  5. Do you need help or not? If you have access to data (sales in particular) between January and March 2013, you can put together your own support for your property’s value. If you can do this, don’t hire anyone. The key is to put together something solid, honest and realistic (don’t lowball the Assessor). If you do not know how to support a value for your property, hire someone. Keep in mind that in most cases I strongly discourage a full appraisal because it’s just too much unnecessary information  unless the property is very complex.

I hope this was helpful for you personally or simply good information to make you a stronger asset and resource for your clients. Do keep me posted if you have any questions. Feel free to comment below and I’ll be sure to respond to you.

My Services: In case it’s relevant, I’ve assisted countless property owners during the tax appeal process over the past few years, and they’ve had profound success in reducing their property taxes. I’ve done quite a bit of work with typical “decline in value” situations, but also with escape assessments and other base-year value challenges. I don’t use a full appraisal because it’s not needed in most cases. Instead I developed a more limited custom valuation product that is amply informative, yet it only costs about 1/3 of what a full appraisal costs. You can check out my property tax website if you wish. Let’s talk more if you have any questions.

Watch a Tax Appeal Video: In case you’d rather listen to the content of this post, watch the video below (or here)

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5 things to know about property taxes so you don’t get ripped-off

There is honestly some really bad less-than-helpful information floating around out there about disputing property taxes. Today I wanted to share five bits of information to help give honest insight into tax issues. These points are relevant for counties surrounding Sacramento as well as California. I hope this helps.

  1. Tax Values Posted: New assessments for 2013 for most counties surrounding Sacramento will be posted online on the Assessor’s website around July 2013. The new assessment should be based on the value of your home on 01/01/2013.
  2. Image-purchased-by-Sacramento-Appraisal-Blog-and-used-with-permissionExpect an Increase: If you purchased in the past 10 years, there is a good chance your property taxes will be going up this year in light of the market increasing in value during 2012. For instance, say you bought your property for $400,000 in 2007, but the assessment was lowered over the past few years to $250,000 due to Proposition 8, which allows for a temporary reduction in assessed value due to market declines. This year the Assessor may look at your property and give a 10%+ boost or so. In future years if the market continues to increase in value, your property taxes can be adjusted each year until the assessed value gets back up to the original “base year” value at $400,000 when you first purchased. On the other hand if you bought a property many years ago, your assessed value should be based on the value of your home when you purchased instead of market value on January 1, 2013. This means you’ll probably have a standard 2% increase for inflation instead of a huge increase like others may have.
  3. property-taxes-Sacramento-CountyDon’t Hire Someone Right Now: If you need to hire someone to help you appeal your property taxes, don’t do that until the formal appeals period is open for your county. For instance, Sacramento County has an appeals period between July 2 and November 30, 2013 (some counties go from July to mid-September). This means if you get a mailer right now promising to help reduce your property taxes, that’s bogus for two reasons: 1) The appeals period is not even open yet; and 2) New assessments for 2013 have not been revealed, so these companies sending mailers don’t really know if you should appeal or not because they don’t have your 2013 assessed value. However, keep in mind the deadlines for disputing supplemental taxes and escape assessments do operate on a different timeline than typical “decline in value” situations as mentioned above. This is why it’s important to actually read the letters the Assessor sends.
  4. Assessed Value & Your Wallet: Remember that every $10,000 of assessed value equals about $100-125 in property taxes. This means if your assessed value increases by $30,000 this year, that’s going to be $300 to $375 more in taxes.
  5. Image purchased at 123rf dot com and used with permission - 14688774_s - smallerProp 8 Form vs Appeal: Lastly, there are two forms for the appeals process. There is a free form called the “Proposition 8 Decline in Value” form, which is an informal review and NOT an appeal. There is also a form called “The Application for Changed Assessment” that IS an appeal – and costs $30. Contrary to public perception, it is technically NOT free to appeal your property taxes. However, my suggestion is for property owners to try the free Prop 8 route early during the appeals period, but then to file a formal appeal a few weeks prior to the appeals deadline if you have not heard back from the Assessor yet. Read more here.

I hope this was helpful in a small way. Keep me posted if you have any questions and feel free to read more property tax articles in case it’s useful or relevant.

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Will your property taxes increase when you get an appraisal?

Sometimes property owners ask me during an appraisal inspection if their property taxes are going to go up because of the appraisal. That’s a great question. I’m going to give Kevin Nunn, a local mortgage professional, first stab at the answer, and then I’ll pitch in a few thoughts.

A Mortgage Professional’s Answer by Kevin Nunn:

Kevin NunnThis question comes up on occasion. The simple answer is “No”. The taxes are based on the County Assessor’s value, and an appraised value is determined by a professional appraiser. The County never sees your appraisal, and they do not consider it in any way when determining the assessed value of a property. Sometimes though, an appraisal is being performed for a reason that will also trigger an increase in the County Tax Assessment. For example; if a property is being appraised for a construction loan that will be used to build a second story. The County will reassess for the added value of the increased square footage. Even in this case though, it is the building permits that trigger the reassessment, not the appraisal. The County would have reassessed even if the owner paid cash for the improvements and no appraisal was performed.

Image-purchased-by-Sacramento-Appraisal-Blog-and-used-with-permission-Image-credit-www.123rf.comphoto_10939567_businessman-taking-a-hit-by-the-taxe-s-hand.htmlluislouro-250-pix1No Sharing: Just so you know, there is not any county database where the appraiser sends an appraisal report when your house is being appraised. The appraisal report should not be delivered to anyone by the appraiser other than the lender during a loan appraisal or the private client during a private appraisal. Unless the county is somehow an intended user of the appraisal report, they’ll never see a copy (they won’t be an intended user unless they’re involved in the transaction somehow).

What does trigger a property tax reassessment?

  1. New Construction: First, a  reassessment is triggered during new construction, which is “any improvement to real property, such as adding a room, pool or garage” according to the Assessor. This is what Kevin was talking about with the example of adding a second story. In this case the addition though would receive a supplemental assessment so that the value of the addition is added to the existing property tax bill (as opposed to the entire property being reappraised). For example, if a house is torn down and is built brand new, the whole house will be reappraised, but otherwise only the new portion (2nd story addition) is taken into consideration for new taxation. Read more here.
  2. Change of Ownership: The second issue to consider that can trigger an increase in property taxes is when there is a change of ownership from one party to another. This means in most cases when a property sells or changes ownership, there will be a new assessed value based on the date of the sale or transfer. Of course not all transfers will initiate a new assessed value, such as common exemptions like an Interspousal Transfer, Registered Domestic Partners Transfer or Intrafamily Transfer (talk to an attorney or title company about your specific situation to ensure whether you are exempt or not). You can read more about exemptions from change of ownership on the Assessor’s website. For reference, the Sacramento County Assessor does state that refinancing is NOT considered a change of ownership.

I hope this was helpful for you. Let me know if you have any questions or property tax dispute situations in need of valuation insight.

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What to do when a “Notice of Hearing” comes in the mail regarding your property taxes

So you filed your property taxes last year and have been waiting for an answer. Now what? Today I want to walk you through what happens after you turn in an appeal. This is good to know for home owners as well as real estate professionals.

After Filing an Appeal: Once you dispute your property taxes, if you provide good support for your value, chances are the Assessor may weigh your situation carefully and either agree with you or offer you a value that is somewhat close to your proposed value. But it doesn’t always play out like that.

notice of hearing from Assessor - Sacramento Appraisal Blog

The truth is even if you provide stellar data and give the best written presentation possible when filing an appeal, you can still get a “Notice of Hearing” form which sets up a date for you or your agent to appear at an appeals hearing. This hearing is generally the last opportunity to make your case for a lower assessed value.

Does a “Notice of Hearing” mean your value has been rejected? Not at all. Keep in mind sometimes these notices in Sacramento County are mailed automatically if the Assessor’s appraiser has yet to get to your file before a certain date. However, it could also be due to the appraiser not agreeing with your value. You’ll never know until you contact the Assessor (I do this for my clients).

Tax Change Withdrawal Form - Sacramento Appraisal Blog

A Real Life Communication Example: Let’s consider the example above. A home owner contacted me to help provide her with a valuation during the process of her tax appeal. I put together a very solid report to clearly illustrate market value. Even the graphs in my report made it incredibly obvious that her property was in no way worth $251,000. However, I still received a “Notice of  Hearing” to make an appearance at an Appeals Hearing. This notice was in no way due to my work, but rather the Assessor’s appraiser was not able to view the property’s file before the “Notice of Hearing” mailer deadline. This means I had to contact the Assessor’s appraiser to talk about the property once the notice came in the mail. Thankfully after reaching the appraiser it was a smooth process, and the appraiser ended up reducing the value by $121,000 (about $1,500 in savings). In light of the agreed upon verbal reduction, I then received the “Tax Withdrawal Form” from the Assessor and then faxed it to their office to basically resolve the appeal by agreeing to the new value listed. It would have been ideal to get the Tax Withdrawal Form in the first place since my original report was already conclusive, but this is how it works. Sometimes there are a couple of extra hoops of communication to jump through. This case was actually easy, but others have taken much longer.

In short, this is a small example, but it helps illustrate what it’s like to communicate regarding property taxes. Sometimes it can be smooth, but in many cases it’s a huge pain there are inconveniences that cause minor delays (which add up over time).

Property Tax Advice (after you file an appeal):

  1. It takes time: Be patient with the process as it can take a while to work it out.
  2. Strategic use of manners: Be diplomatic with the Assessor’s office. Avoid name-calling or rudeness.
  3. Negotiate a new value by calling: If you get a Notice of Hearing letter, contact the appraiser listed on the form to try to work out a value before the hearing takes place. Just because there is a scheduled hearing does not mean the hearing has to actually happen. It saves you and the Assessor time if you can come to an agreement before the hearing.
  4. Get good support: If you don’t have any support for your value or research, you should hire someone to help you. For instance, I am talking with a property owner right now about his hearing in 40 days. He has zero support for his value when he filed last year, so he really needs something to give to the Assessor (or have me do it for him).
  5. Be ready when making the call: Keep in mind sometimes a discussion about the value of your property ensues on the phone when calling the appraiser after getting a “Notice of Hearing.” The conversation can be critical for the Assessor’s interpretation of the market, so have your research ready before making the phone call. This is where really knowing the comps and neighborhood market comes in handy.

I hope this was helpful and you now have a bit more insight on what might happen after you file your property taxes. Let me know if you have any questions.

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook