Why is your recent purchase assessed so much higher than the purchase price?

I’ve been getting this question quite a bit lately. Home owners wonder sometimes why their assessed value is so much higher than the purchase price. It doesn’t make any sense, right? Well, let me share with you a scenario to explain why this happens sometimes. I spoke with a home owner this week, and his property is currently assessed at $350,000 despite the property being purchased in April 2012 for $200,000. Obviously this is a huge difference, and it’s highly inconvenient too since his tax bill is now $1,500+ higher than expected.

Why does this happen? When you purchase a property in the latter part of the first or second quarter of the year in Sacramento County, sometimes the Assessor is not able to reassess your property before the new assessments are published on  July 2. This means that even though you purchased at a much lower level (market value presumably), the Assessor’s value is not based on your new purchase because they couldn’t get the new data in the system before assessments were posted.

What should you do when this happens?

1. Call the Assessor’s Office to discuss your situation.
2. You’ll most likely be reassessed come October since The Assessor reviews purchases in the beginning of the year to catch errors like this (see points 5 & 6 though).
3. You’ll be issued a refund if you overpaid on your property taxes.
4. Don’t hire anyone to appeal your property taxes until you hear back from the Assessor. Why? Because this scenario above is most likely really just a logistical issue due to the time you purchased your property rather than blatant overassessment. Hopefully your property will be reassessed in October to a level more consistent with your purchase price.
5. However, if the Assessor does think your property is worth the higher amount and you know that’s not the case, then it’s time to appeal.
6. If you don’t hear from the Assessor’s office by mid-October or early November, let’s talk. Do not let the deadline to appeal on November 30, 2012 pass before you do something. If the deadline to appeal does pass though, keep in mind you have four years to appeal your base-year value (This is only for “base year” value situations. Most other property tax scenarios have much less time – only a matter of months).

While it can be really frustrating to be in this situation, I hope this was helpful to answer some of your questions. Feel free to contact me if you have any other questions or property tax appeal issues to discuss.

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