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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What is the difference between “assessed” value and “appraised” value?

Why is there often a huge difference between what the Assessor says your property is worth and what an appraiser says maybe during a purchase or refinance? Let’s take a look below a some of the main distinctions and then consider a real life example of a property owner who has overpaid about $8,000 in property taxes in recent years because his assessment was simply too high. Ouch.

Assessor vs Appraiser - by Sacramento Appraisal Blog

Assessor vs. Appraiser: An Assessor in California is required to have a certified appraiser’s license, but that doesn’t mean the value will be same as an appraiser coming out to your house during a refinance, purchase or other situation. Ultimately there is a huge value difference at times because the Assessor is establishing value for taxation purposes (and is bound by the protocols of tax code) and an independent fee appraiser is likely measuring the current market and is not doing anything related to taxation.

Assessed value vs Market Value of a 4-plex - by Sacramento Appraisal Blog

Overpaid $8,000 in Property Taxes: This case above is a striking example of one of the unfortunate byproducts of a mass appraisal process by the Assessor. This property owner’s assessment on his fourplex in Sacramento was accurate for a couple of years after purchasing around $300,000 in 2003, but as values tanked in the neighborhood, the assessed value simply remained too high above all other competitive sales. The sad result for the property owner has been about $8,000 in overpayment through the years. Unfortunately the owner cannot go back to dispute the previous years of assessment, but at least this year he is going to appeal his property taxes to hopefully bring the assessed value down from $325,000 to around $200,000 where it should be.

Any thoughts, questions or stories to share?

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How long does it take to appeal property taxes in Sacramento County?

When will you hear back from the Assessor? It could be a matter of months, but ultimately it can take up to two years. The County of Sacramento states “The time limit for the Assessment Appeals Board to act on an application is two years from the date of filing.” In my experience it seems The Appeals Board typically gets back to owners within a year, but sometimes longer and others times only a matter of months.

property taxes Sacramento CountyDo you still have to pay your property tax bill at the higher level during an appeal? Unfortunately yes. This is often frustrating for home owners, but it’s the way the system works. Verbatim from the Assessor’s Office, “You must pay the original bill timely to avoid penalties, pending the outcome of the review or appeal.” Keep in mind Sacramento County will issue you a refund from your overpayment if your property taxes get lowered through the appeals process.

How long does it take Sacramento County to issue a refund after a successful appeal? Your refund should come within 95 business days. Don’t expect to be the exception either. You’ll get between $100-125 back for every $10,000 in property reduction. If you were overassessed by $50,000, for example, you would get $500-625 back in your pockets. From the Assessor’s website:

All offices involved in the property tax process (Assessor, Auditor-Controller and Tax Collector) are experiencing a historically large volume of these reductions. When the Assessor’s Office determines a reduction in assessed value is appropriate, a roll change is processed and certified to the Auditor-Controller, typically within 15 business days. The Auditor-Controller will issue a corrected tax bill within 20 business days and deliver it to the Tax Collector for further processing. If a refund of paid money from the original bill is required, it is normally issued within 60 business days after the corrected tax bill has been calculated. You should anticipate the assessment changes will take up to the full 95 business days to be processed.

Is it still worth it to appeal despite having to wait? You have to answer that question for yourself. I think if there is money to save, it’s absolutely worth it in my opinion, and the appeals process is the only way to obtain a reduced value (unless the Assessor reduces your property value automatically due to their own research). It may be frustrating to wait, but the alternative is to overpay taxes. I have successfully appealed my property’s taxes three times and I always enjoy getting a refund to check to keep my hard-earned money in my pocket. If I have to wait a while to get money returned to me, I can live with it.

I hope this was helpful. Let me know if you have any questions, check out other articles on property taxes and visit my property tax appeal website for additional information.

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

Client’s property assessment lowered by $190,000

It’s always nice to get good news for clients. Recently I got wind that the Assessor’s Office in Sacramento County ended up agreeing with my opinion of value for a client, so the client will now have their property taxes reduced by $190,000. That’s a saving of about $2,400, so my client should get a fat refund check in the mail soon. That should help with rising gas prices, huh?

tax appeal reduced

NOTE: The image above is a snippet of the “Tax Change Withdrawal” form in Sacramento County. These forms sometimes leave home owners confused because property owners are fearful of what the form really means. After all, nobody wants to sign the wrong form and accidentally stop an appeal. But in this case the withdrawal at hand is something good because the purpose of signing the withdrawal form is to formally accept the revised value and thereby pull out from the appeals process. Read more here if you are wondering about signing the Tax Withdrawal form.

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