Market may lower property tax assessments
While the Truckee-Tahoe area may have have been spared the sweeping plunge in home prices in the Central Valley, some homeowners who bought at the market’s top may be eligible for reduced taxes.
With the recent slow-down in real estate, many are wondering why property taxes haven’t declined to match the drop in prices. But officials say California’s landmark Proposition 13 requires property taxes to be based on a home’s value at the time of its sale or construction.
Yet, those who bought near the peak of the market may pursue options to reduce their property taxes until the market picks up again.
“Assessors are allowed to temporarily lower the value of a home. The base-year value must exceed the current market value, and it can be reduced until the market value goes higher again,” said Nevada County Assessor Dale Flippin. “The assessor picks the lower of the two.”
But if the market value of a home remains higher than its assessed value, no reduction is available regardless of market changes, he said.
Some area homeowners have questioned Nevada County’s 2 percent increase in property valuations this year, but officials call it an inflationary adjustment rather than a tax hike.
“The 2 percent inflation isn’t mandatory, but it’s capped at 2 percent even if inflation is higher, so taxes are always behind,” said Nevada County Supervisor Ted Owens.
Placer County Assessor Bruce Dear said Placer is also adopting a 2-percent inflationary increase of its property values, as called for by Proposition 13, passed overwhelmingly by California voters in 1978.
Flippin said while some residents regard the 2-percent assessment increase as a tax increase ” at a time when Sacramento and Bay Area counties are reducing property values ” the two geographical areas are not comparable.
“The Sacramento assessor is dropping something like 50,000 [home] values, but we don’t have the same situation up here. Our market tends to trail a little and act a little differently,” Flippin said.
In the Bay Area, some counties have reduced property taxes for homeowners for the first time since the mid-1990s, mainly for those who bought houses since 2005 in areas where prices have since dropped, according to the San Francisco Chronicle.
Rather than wait on individual homeowners to request a reassessment, assessors in some counties automatically reduced thousands of 2007-08 property tax bills, which began arriving in mailboxes last month, the Chronicle reported.
Placer County reduced the assessed values of about 18,000 homes, cutting close to $1 billion from the county’s assessment roll, Dear said.
“The vast majority of that is related to the west, all this explosive growth in Rocklin, Lincoln and Roseville,” Dear said. “Tahoe is a different market, but we have lowered a significant number of timeshares.”
Because it is difficult for the county to keep track of all contributing factors in home values, Dear encouraged homeowners who think their homes were assessed higher than current market values to contact the Placer assessor’s office.
Flippin said his department has encouraged Nevada County homeowners to appeal their assessed values if they are in the same situation.
Eastern Nevada County in particular may have a number of homes eligible for the reassessment because of higher property values at the market’s apex, Owens said.
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