Understanding how it works to appeal property taxes

When the market gets hot, people tend to forget about their property taxes. Even the Sacramento County Assessor shows there were 35% less appeals filed last year compared to previous years (see graph below). We all know the market increased rapidly in recent time, but some people frankly still should have appealed, but they didn’t. Here is how the appeals process works and some tips to consider for this year.

Real Estate Agents & Loan Officers: Knowing these tips makes you well informed and an enormous asset for your clients (download a larger image to use in your newsletter). I hope this helps.

flow chart for appealing property taxes - by sacramento appraisal blog - white 530 - 2

10 quick things to know about appealing property taxes

  1. The Date: Your assessed value is based on January 1 of the given year – NOT today’s value.
  2. 2004-2007: If you purchased from 2004-2007 in particular, be sure to pay attention to your property taxes this year since the market is not quite back to those price levels yet in many cases.
  3. Wait Until July: Wait to see how the Assessor assesses your property before deciding to appeal. New assessments should be out in very early July. Do NOT hire anyone (including me) to help you appeal before you know what your assessed value is.
  4. Your Wallet: Remember that ever $10,000 in assessment is about $125 out of your pocket. This is a good gauge to keep in mind to help you decide whether it is worth it to appeal or not.
  5. Deadlines: You can begin appealing in early July, but the deadline to dispute property taxes in Sacramento County is usually November 30 (sometimes December 2). The deadline to appeal property taxes in Placer County is usually mid-September (dates will be announced by July).
  6. Two Form Options: There are 2 forms you can fill out. The Prop 8 “Decline in Value” form is a free informal review and the Application for Changed Assessment is $30 and is an actual appeal. Knowing the difference can make a huge impact for you and your clients because sometimes people think they appealed, but they actually only filled out the free form. Here is a brief video explaining the differences between these two forms.
  7. My Recommendation: In this market I recommend filling out the free Prop 8 “Decline in Value” form first, but if you don’t hear back by October in Sacramento County or August in Placer County, file a formal appeal. The Prop 8 form has no weight or power to take your appeal further once the appeals deadline has passed. In other words, if the Assessor disagrees with your value on the free form, you cannot move the conversation forward or have the right to an appeals hearing once the deadline to appeal has passed (since you did not actually file a formal appeal).
  8. Lowball: Don’t lowball your value.
  9. Comps Near January: Support your value with sales close to January 1 of the given year. Make sure your “comps” really are comparable. Don’t just use the lowest sales in the neighborhood. Use whatever is comparable.
  10. What Happens After You Appeal: The Assessment Appeals Board will either agree with your value, propose a new value that you can either accept or reject, or call for an appeals hearing. Try to resolve your appeal before the hearing. Otherwise bring your support to the hearing and argue your case. Resolving your appeal prior to the hearing can happen over the phone with whatever appraiser is assigned to your case. This is where knowing the market and all comps really well comes in very handy.

By the way, this graph shows the number of appeals filed last year after the market really heated up. What will happen this year?

graph of assessment appeals filed

flow chart for appealing property taxes - by sacramento appraisal blog - white 2A Resource for Your Blog & Newsletter: For my real estate friends, let your clients know about the tips above by forwarding this post. Or you can use my property tax flow image on your blog, Facebook or in your newsletter (just link back to me). Here is a larger-sized image too in case it’s relevant. Just click on the thumbnail and save to your desktop.

My Services: I’ve done quite a bit of work with “decline in value” property tax situations, but also with escape assessments and other base-year value challenges. I don’t use a full appraisal because it’s really not needed in most cases. Instead I developed a more limited custom valuation product that is amply informative, yet it costs less than a full appraisal.

Questions: Any other tips? Why do you think there were less appeals filed last year? Have you ever disputed your property taxes and found success?

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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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No break in property taxes for the Maloofs this year

The Maloofs saved quite a bit in property taxes a year ago, but 2012 won’t bring the same fortune. Well, if your property taxes don’t go up, that’s still somewhat of a win, right? As you can see in the graph below, Power Balance Pavillion was assessed near $60 million from 2008-2010, but had a dramatic decrease in assessed value in 2011, which has resulted in an assessment for 2011-2012 at $29,129,000.

Property Taxes for Power Balance Pavillion 1 Sports Parkway Sacramento

There are technically five separate parcels for the arena in Natomas, but the above graph only considers 1 Sports Pkwy since it is the largest and most heavily taxed parcel (it’s the parcel that includes the arena). The other four parcels really only comprise a minimal addition to the overall tax picture.

Breakdown of assessed value for 1 Sports Parkway
2012 assessed value: $29,129,000
2011 assessed value: $29,129,000
2010 assessed value: $56,534,445
2009 assessed value: $58,844,792
2008 assessed value: $59,595,796

Cost of an Arena: $29 million might seem like a low value for an entire arena, but keep in mind the original stadium was constructed for about $40 million in 1987 (Wikipedia states today’s costs would be $78.6 million in 2012 dollars). For further reference, there was talk in recent months of building a new arena to replace the current one, and the projected cost was closer to $400 million.

What stands out to you about the figures above? What do you think it would’ve been like to have a new arena (the plan failed for anyone that didn’t know)?

FYI: Property taxes for 2012 were posted days ago by the Sacramento County Assessor. I recommend all property owners to look over their assessed value closely (click this link) to make sure you are paying your fair share of taxes – and no more. The value should be based on January 1, 2012 (NOT today). If you have any questions about the property tax appeal process or would like my tax appeal company to look up your property for free, please click here.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook