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:
This 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.
No 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?
- 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.
- 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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