Proposition 8 Decline in Value: Really? Find Out What the Assessor Won't Tell You!

Article Written By: ValerieFaltas

When the real estate market is declining like it is now and has gone below your assessed value, you are allowed a break in your property taxes. Prop 8 Decline in Value is an exemption to California Property Tax Law which determines all property taxes today for homeowners in California. Prop 13 was enacted in 1978 to limit the property taxes paid by property owners. Prop 8 is an exemption to Prop 13 which states that your property tax value should not be higher than the current market value.

Seems like great news but, it is only a TEMPORARY answer. Prop 8 is something you have to file for most of the time. Sometimes the Assessor will automatically lower your property taxes because he is an elected official and will do what he can to maintain voter approval. The Prop 8 Exemption works is like this: your date for any fiscal year is January 1st for assessment purposes. The comparable sales for your residence for 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 comparables must have closed between January 1st, 2009 and March 31, 2009. To get this reduction in value there has to be comparable sales of residences similar to yours within the first quarter of the designated year that are lower than your assessed value for that year. If there are no comparable sales that show a lower value for your home during that first quarter, your are out of luck.

This is a major problem for several reasons: one of the biggest is that the first quarter of the year has the fewest comparables because those sales started during the holiday season which is the slowest time for real estate, no matter what type of market we're in. 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 comparable sales to choose from are much less than later on. When the decline really starts to show during the second and third quarters of the year you can't use those sales for a Prop 8 reduction.

This is not the best solution because it is only a SHORT TERM reduction in value, so when the market starts to climb back up, and it always does, your old assessed value gets restored to what it would have been had you never gotten the reduction. Many property tax specialists appear in declining markets claiming to be able to save you on property taxes. They send mailers that look like they are from the Assessor which they are not and sadly, homeowners pay good money to have their taxes andquot;loweredandquot; only to have their tax bills revert to higher rates 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!

A typical example of a Prop 8 Exemption on an average property in California. So, I purchased a residence in 2005, at the hight of the market, for $500,000, at a 2% trend my current assessed value for 2008 is $530,604. My market value as of the first of 2008 is near $430,000 and as a knowledgeable tax payer I apply for a Prop 8 Reduction to get a reduction. So, for 2008 I have a nice break, Im paying property taxes on a value that is $100,000 below my trended base value and saving around $1,250! The real estate market goes down and based on the Assessors review, the Prop 8 Exemption value is still given for 2009. So for 2009 I am paying based on the $430,000 which is even better this year since my trended base in 2009 would have been $541,216 and so I am saving about $1,390! Fantastic!

Now, the real estate market starts to turn around, and the market values are going up and for 2010 my market value is upwards of $500,000, so the Assessor's Office alters my Prop 8 Exemption value to $500,000 which is below my 2010 trended base value of $552,040. Absolutely, not as good as having $430,000 as my value. Yet, I am still saving and this year my Prop 8 Exemption value is $52,000 lower than my trended base value I am now saving $650 a year in property taxes. Its now 2011 the market is going up again and now my market value is somewhere around $600,000 and the assessor restores my value to the trended base, which now is $563,080. So, now I'm paying $7,038 in taxes. I so wish I still had that $430,000 property tax base

There is a way in California to PERMANENTLY reduce your property tax base in today's declining market, utilizing Prop 13 and essentially bypassing the Prop 8 Exemption and all of its limitations. Additionally, find out how to avoid reassessments when you have inherited property and also how to utilize all the exemptions allowed by Current Property Tax Law.

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.

About the Author

Check out the FREE ebook written by Valerie Faltas, Property Tax Expert today! lower property taxes , prop 8, prop 13 , property tax secrets, property tax loophole,

You Can Link Directly to "Proposition 8 Decline in Value: Really? Find Out What the Assessor Won't Tell You!" by using the url:
http://www.allbestarticles.com//finance/real-estate/proposition-8-decline-in-value-really-find-out-what-the-assessor-won-t-tell-you.html

This Article Has Been Published on Thu, 4 Jun 2009 and Read 87 Times

Find All Best Articles at http://www.allbestarticles.com

Rating: Not yet rated

Comments

No comments posted.

Add Comment

You do not have permission to comment. If you log in, you may be able to comment.

Related information on Real Estate

Why do I need a conveyancing solicitor when buying or selling real estate?
London Living: The Best in the World
Real Estate Toronto Neighborhoods and Property Hunting for Leases
The Affordable Secret of Mayfair Office Space
10 Ideas To Follow When Selling Your House
Property in Belgravia - London's Centre of Architectural Splendour
Is Abu Dhabi facing Dubai-like property slump?
Chesire England Serviced Offices.
Find out About Relevant Ideas To Choose Horse Stables
Pros and Cons of locating an office in Mayfair
Things to keep in mind when choosing where to locate an office in London
Guide To Buying A 2 To 5 Million Dollar Home In The Dell In Hollywood
When Selling A Home On Sunset Plaza, Point Out The Exclusiveness For The Fastest Sell
An In-Depth Look At The Toronto Home Market
What a Phoenix Real Estate Listing Will not Show That A Neighbor May
Which are the prime areas for office space in London?
Tips to make the most of your office space
How have commercial property prices in London been affected by the recession?
Benefits of working in Covent Garden
Investment opportunities in Pakistan Real Estate sector
Quit Claim Deed Basics
Dubai The Place To Be In Terms Of Property
Buy House in Philippines
Best way to write professional advertisement for Dubai properties
Things to consider while getting a house on rent