In a going down real estate market, you are allowed a break in your property taxes. Prop 8 Reduction is an exemption to California Property Tax Law which is the basis of property taxes for property owners in California. Prop 13 was put into place to control property taxes paid by property owners. Prop 8 Decline in Value is an exemption to Prop 13 which says that your property tax value should not be higher than market value.
This appears to be good information yet, it is only a TEMPORARY answer. Prop 8 Decline in Value is usually something you have to file for. The way Prop 8 Decline in Value works is like this: your date for the current fiscal year is January 1st for your property taxes. So, the comparable sales for your home for this exemption, need to have closed within the first quarter of the given year; January 1 to March 31 based on the language of the law. So to get a The Prop 8 Exemption reduction for 2009, the comparable sales need to have closed between January 1st, 2009 and March 31, 2009. To qualify for this reduction in value there has to be comparable sales of houses similar to yours within the first quarter of the designated year that are lower than your assessed value for that year.
The problem here has many reasons: one of the worst is that the first three months of the year is the slowest time for comparable sales because those tranactions started during the holiday season which is the slowest time for real estate. Real estate sales take 30-60 days to close, so most of the sales that close within the first quarter of the year opened escrow during the holiday season. The sales to choose from are more sparse than later on. When the market movement really starts to show during the second and third quarters of the year you are out of luck because those sales are outside the perimeters for a Prop 8 Exemption reduction.
This is not a great solution because it is only a SHORT TERM reduction in value, so when the real estate market goes back up, and it always does, your base value goes back to what it would have been had you never gotten the break. Numerous property tax specialists appear in declining markets offering to save you on property taxes. They send direct mail that look official and from the Assessor which they are not and unfortunately , taxpayers pay hard earned money to have their property taxes "reduced" only to have their tax bills revert back once the market recovers. Truthfully you never pay the Assessor for any service or review of your value - you pay for that with your property taxes already! Generally, the form you will out with the Assessor is simpler than the form these companies send you in the mail!
Let me give you a typical example of a Prop 8 Exemption applied to a home. Lets say, I bought a property in 2005 for $500,000, at a 2% trend my current assessed value for 2008 is now $530,604. Lets say my market value as of the first of the year is near $430,000 and of course because I am a knowledgeable tax payer I apply for a Prop 8 Reduction to get a reduction. So, for 2008 I get a nice property tax break, Im paying my property taxes on a value that is $100,000 lower than my trended base value and saving close to $1,250 this year! Of course the market continues to decrease and based on the Assessors review, the Prop 8 Exemption value is maintained for 2009. So for 2009 I am paying again based on the $430,000 which is even better this year since my trended base in 2009 would be $541,216 and so I am saving at least $1,390! Awesome right!
Well, the market starts to turn around, and the values are climbing and for 2010 my market value is around $500,000, so the Assessor's Office adjusts my Prop 8 Exemption value to $500,000 which is lower than my 2010 trended base value of $552,040. Definitely not as great as having $430,000 as my assessed value. However, I am still saving and this year since my Prop 8 Exemption value is $52,000 lower than my trended base value I am now saving $650 a year in paid taxes. Well, for 2011 the market is skyrocketing gain and now my market value is somewhere around $600,000 and so the assessor restores my value to the trended base, which for this year is $563,080. So, I am now paying $7,038 in taxes. I wish I still had that $430,000 base
California Property Tax Law offers a way to PERMANENTLY reduce your property taxes with today's declining real estate market, based on Current Property Tax Law and essentially avoiding Prop 8 Decline in Value and all of its limitations. In addition, find out how to avoid reassessment when you inherit property and how to use the exemptions allowed by Prop 13 to your maximum advantage.
About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com
This appears to be good information yet, it is only a TEMPORARY answer. Prop 8 Decline in Value is usually something you have to file for. The way Prop 8 Decline in Value works is like this: your date for the current fiscal year is January 1st for your property taxes. So, the comparable sales for your home for this exemption, need to have closed within the first quarter of the given year; January 1 to March 31 based on the language of the law. So to get a The Prop 8 Exemption reduction for 2009, the comparable sales need to have closed between January 1st, 2009 and March 31, 2009. To qualify for this reduction in value there has to be comparable sales of houses similar to yours within the first quarter of the designated year that are lower than your assessed value for that year.
The problem here has many reasons: one of the worst is that the first three months of the year is the slowest time for comparable sales because those tranactions started during the holiday season which is the slowest time for real estate. Real estate sales take 30-60 days to close, so most of the sales that close within the first quarter of the year opened escrow during the holiday season. The sales to choose from are more sparse than later on. When the market movement really starts to show during the second and third quarters of the year you are out of luck because those sales are outside the perimeters for a Prop 8 Exemption reduction.
This is not a great solution because it is only a SHORT TERM reduction in value, so when the real estate market goes back up, and it always does, your base value goes back to what it would have been had you never gotten the break. Numerous property tax specialists appear in declining markets offering to save you on property taxes. They send direct mail that look official and from the Assessor which they are not and unfortunately , taxpayers pay hard earned money to have their property taxes "reduced" only to have their tax bills revert back once the market recovers. Truthfully you never pay the Assessor for any service or review of your value - you pay for that with your property taxes already! Generally, the form you will out with the Assessor is simpler than the form these companies send you in the mail!
Let me give you a typical example of a Prop 8 Exemption applied to a home. Lets say, I bought a property in 2005 for $500,000, at a 2% trend my current assessed value for 2008 is now $530,604. Lets say my market value as of the first of the year is near $430,000 and of course because I am a knowledgeable tax payer I apply for a Prop 8 Reduction to get a reduction. So, for 2008 I get a nice property tax break, Im paying my property taxes on a value that is $100,000 lower than my trended base value and saving close to $1,250 this year! Of course the market continues to decrease and based on the Assessors review, the Prop 8 Exemption value is maintained for 2009. So for 2009 I am paying again based on the $430,000 which is even better this year since my trended base in 2009 would be $541,216 and so I am saving at least $1,390! Awesome right!
Well, the market starts to turn around, and the values are climbing and for 2010 my market value is around $500,000, so the Assessor's Office adjusts my Prop 8 Exemption value to $500,000 which is lower than my 2010 trended base value of $552,040. Definitely not as great as having $430,000 as my assessed value. However, I am still saving and this year since my Prop 8 Exemption value is $52,000 lower than my trended base value I am now saving $650 a year in paid taxes. Well, for 2011 the market is skyrocketing gain and now my market value is somewhere around $600,000 and so the assessor restores my value to the trended base, which for this year is $563,080. So, I am now paying $7,038 in taxes. I wish I still had that $430,000 base
California Property Tax Law offers a way to PERMANENTLY reduce your property taxes with today's declining real estate market, based on Current Property Tax Law and essentially avoiding Prop 8 Decline in Value and all of its limitations. In addition, find out how to avoid reassessment when you inherit property and how to use the exemptions allowed by Prop 13 to your maximum advantage.
About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com
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