If your home is worth less (market value) than what you paid for it (assessed value), here’s some good news.
Greg Smith, the county’s assessor/recorder/clerk, issued a statement yesterday reminding property owners of state law (Proposition 8) that allows those in that situation could be eligible for a temporary reduction in assessed value.
The last time Prop. 8 came into play was the major recession affecting home values in the mid-1990s. This time, fewer homes are likely to fall into this category, which is most likely comprised of homes bought in 2006 or those in niche markets, like condos.
The North County Times’ business editor, Ann Perry, added a really helpful explanation:
When you buy a home or piece of property your assessed value, or the value used to compute your taxes, is based on what you paid. That’s 1 percent of the price, plus the costs of local bonds such as Mello-Roos bonds. The typical tax is roughly 1.1 percent, Smith said.
Thereafter, thanks to Prop. 13, your assessed value and thus your property taxes are limited to no more than a 2 percent increase annually. In recent years, with property values rising at 10 percent or more a year, market values exceeded the assessed values (listed in the upper right-hand corner for your current tax bill).
But if you bought a home in the last year or so and have seen similar homes in your area selling for less than you paid, then you can make a case for tax relief.
Property owners who wish to apply for the temporary reduction should write a letter to Smith’s office with their opinion of their home’s actual market value, corroborated by documentation such as comparable sales, current listings or a recent appraisal. The letter must be sent by May 15.