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:
When 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.- 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).
- 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.
Which 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.- 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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Expect 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.
Don’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 
Prop 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.