Sagging Real Estate Market Has Up Side: Tax Drop : Economy: Owners can appeal assessment if they think the county has overvalued their property, and reduce tax payments.
For some homeowners, there may be a silver lining in falling real estate values: lower property taxes.
For the first time in decades, the San Diego County assessor’s office is seeing a widespread decline in market values of houses and commercial real estate on the tax rolls.
For many--but not all--property owners, the decline in real estate values can translate into smaller property value assessments and, therefore, smaller tax bills.
Chances are, however, that only owners who have purchased real estate since 1989 are due a tax break, San Diego County Assessor Gregory Smith said. That’s because Proposition 13 has limited assessment increases to 2% per year since 1978, meaning that tax assessments of homes purchased in prior years generally lag far behind the increase in market values.
“Only when the market value of their home falls below assessed value do taxpayers need to be concerned,” Smith said. “And most homes purchased before 1989 still have a low assessed value.”
Property owners should not expect the government to know where market values have declined and to make the adjustments automatically, Smith said. In fact, his office typically reviews property tax assessments only after owners bring cases to his attention with appraisals or sales data of comparable homes in the taxpayer’s neighborhood.
Generally speaking, houses in San Diego County have lost between 5% and 10% of their market value over the past year, Smith said. Some expensive homes and those in certain new subdivisions have lost even more value.
And hotels, apartments and commercial properties--retail and office buildings--have lost more value than residential properties. Those types of property also are eligible for tax cuts if values have skidded.
For example, a home acquired for $400,000 in 1990 may only be worth $360,000 today. Since property taxes are figured roughly at 1% of assessed value, the 1990 taxes due of $4,000 may have shrunk to $3,600 this year.
With the widespread decline in values in mind, the county sent out notices in July to more than 100,000 property owners who had purchased property since 1989, reminding them of what the assessed values are on the county’s tax rolls. The mailings, Smith said, were reminders to owners to compare the assessments with current market values and file an appeal if called for.
There are about 800,000 taxable real estate properties in the county, Smith said.
Technically, property owners must have applied for an assessment adjustment by June 30, the date when the assessor’s office turns over the tax roll to the county tax collector’s office. Half of this year’s tax bill is due Dec. 10, the rest on April 10, 1993.
But state law gives all California property owners until Sept. 15 to file an appeal of their assessments if they feel they are over market value.
Property owners who think they may be due a tax cut should start by calling one of four assessor’s branch offices or the central San Diego office and find out what their property’s assessed value is, if they do not already know. If excessive, property owners must request an appeal form that must be filed and documented by Sept. 15.
Owners should bolster their claims with appraisals, which are done routinely by lenders when owners buy, refinance or remodel their property. Or homeowners can include comparable sales data that is obtainable from real estate brokers, who usually are happy to provide the information in the interest of establishing relations with a potential future client, Smith said.
More than 90% of the appeals made since July 2 have been handled and routinely approved by the county assessor’s office, Smith said. If the owner disagrees with the decision, an appeal can be made to a three-person board of real estate professionals such as attorneys, brokers and accountants.
The county has approved about 7,600 appeals of assessments this year, Smith said. Of those, about 80% are commercial properties or apartment buildings, he said.
Even with declining values, total assessed property value in the county this year is about $1.6 billion, up 4.6% from last year. The increase, which Smith said is due to new construction, is far below the 11% to 13% increases in annual assessments seen from 1983 to 1990.
