Cut Your Own Tax Bill : Property Value Down? No Need to Hire an Agent to Request a Reappraisal
Numerous appraisal and real estate firms are offering to help California homeowners capitalize on declining values by lowering their property tax bills.
One Los Angeles homeowner says that in the last month, she received two letters, one postcard, a fax and a phone call from companies promising to lower her property tax. Virtually everyone who purchased a home in the last three years is getting similar letters and phone calls, realtors say.
These “reappraisal” experts--who typically charge between 25% and 50% of the amount they save you--are nothing more than con artists who woo people into paying excessive fees for procedures that any homeowner can perform easily. In Los Angeles County, these procedures are being done automatically.
“What they are trying to do is rip off the general public by charging exorbitant fees for something that anyone can do very easily themselves,” said Carlton P. Adams, a real estate broker with Lazare-Johnson & Associates in La Canada.
Indeed, if you live in Los Angeles County, the county assessor’s office is likely to lower your property tax bill automatically, County Assessor Kenneth P. Hahn said.
Hahn’s office is nearing the end of a massive reassessment of houses purchased between late 1988 and early 1992. He has determined that the vast majority of property owners have suffered a decline in home values--and therefore deserve a break on their property taxes, he said.
According to preliminary findings, about 240,000 of the 350,000 individuals who bought homes during that time have seen their property values decline between 1% and 20%. They will be notified within the next month that their property tax bill is being reduced, Hahn says.
The automatic reassessment is not being done on commercial or industrial properties or on apartment buildings. Owners of such properties must apply individually if they believe their property values have eroded and need to be reviewed.
Additionally, homeowners in other counties, such as San Bernardino, Riverside, Kern, Orange and San Diego, must apply for review if they believe the assessed value of their property exceeds its market value. Property tax assessments are done on a county-by-county basis, and most counties will not lower an assessment unless the homeowner requests it.
Property taxes are calculated as a percentage of the appraised value of the house. Appraised values--and property taxes--usually rise by about 2% a year. In times of declining prices, a homeowner can request reassessment by claiming that the home is worth less today than what was paid for it.
Reassessment applications, also known as Proposition 8 forms, are simple, one-page schedules that ask what the current property assessment is, what you believe it should be and why. Many realtors stock the forms, but if yours doesn’t, you can get the form from the county assessor’s office.
The hardest part of the application is a section called “comparable market data information,” which asks you to list the sale prices of three similar homes in your area. Again, realtors can provide comparable sales data, but so can the assessor.
“Some people feel like they’re dealing with the IRS, but we provide sales information and we assist them,” said Barry Bosscher, principal appraiser at the assessor’s office. “We have no vested interest in keeping the value higher than it should be.”
Filling out the form and getting the comparable-sales information shouldn’t take more than an hour, experts say.
Each county has slightly different rules. The deadline for filing a reassessment application is May 15 in Los Angeles County and June 30 in San Diego County, for example. All counties have a process for requesting a tax review.
Your chances of winning a lower tax bill after filing the reassessment application are relatively good, experts add. Some counties say that well over half of those who file the forms get a reduced value.
Additionally, those who still believe that the reassessed value is too high--or who miss the deadline for filing the ordinary reassessment form--can file appeals. The appeals process is similar to the reassessment process, but it may require an in-person meeting with the county assessment appeals board.
However, few of the “experts” who are pushing consumers to hire them to lower their property taxes will volunteer information about the automatic reappraisal. Worse still, those who ask about it may be given misleading information.
For example, I called several reappraisal firms, asking for information for publication in the Los Angeles Times. None returned my phone calls.
Later, I called again, saying--as is true--that I received their solicitations in the mail and wanted more information. This time, I had no trouble reaching someone.
The same question was posed to two local reappraisers: “Why should I hire you when the county is already doing the job?”
“They are not going to give you as much as I can save you,” said Michael McGuiness, a Los Angeles appraiser who had sent me a postcard. McGuiness speculated that the county would reduce assessed values for tax purposes only by 1% or 2%.
Said Stephen C. Morrison of Morrison Associates in Marina del Rey: “The city is never going to reduce it (assessed value) to the level that you want. That’s why you need a firm like mine.”
Morrison, who had been told early in the conversation that I was a reporter, said he no longer solicits business from individual homeowners in Los Angeles County because of the automatic reassessment. Given his fee--25% of “the first year’s savings”--it may not make sense to hire him, he added.
Still, he said, if “you don’t mind coming to me thinking next year and the year after that you are going to have a reduced value, then that’s fine.”
However, the first year’s savings is all you get from a successful application. Proposition 8 reassessments are valid for one year only. If property values rise, the assessor’s office can boost values back to their previous levels, plus 2% a year.
The only way to stop that is to fill out another application in every year that you want to maintain the depressed value. Each application will be reviewed and accepted or rejected based on the comparable sales data for that year.
It’s important to note that there is nothing illegal or even unethical about offering reassessment services. But if you buy them, realize that you’re paying a lot--often several hundred dollars--for something that is fairly easy to accomplish alone.
Reassessing Your Home
In light of declining property values across the Southland, the Los Angeles County assessor’s office is reviewing properties purchased between late 1988 and early 1992. Out of the 350,000 properties that changed hands during the period, about 240,000 have declined in value, according to County Assessor Kenneth P. Hahn. Here’s a sampling of properties covered by the survey and rough estimates of how much those homeowners will save in annual property tax payments. Property taxes and tax savings are calculated based on the county’s 1% rate. However, most people pay a bit more than the noted rate--and will save more--because their cities charge additional taxes based on the assessed value of the home. These city taxes typically range between 0.1% and 0.25%. 1) Pasadena * House built in 1928; 3 bedrooms, 2 baths; 1,955 sq. ft. * Purchase price (3/12/90): $375,000 * New assessed value: $342,000 * Percent change: -8.8% * Old property tax: $3,750 * New property tax: $3,420 * Savings: $330 2) Compton * House built in 1947; 3 bedrooms, 1 bath; 1,160 sq. ft. * Purchase price (4/25/91): $124,000 * New assessed value: $120,000 * Percent change: -3.3% * Old property tax: $1,240 * New property tax: $1,200 * Savings: $40 3) Whittier * House built in 1951; 4 bedrooms, 2 baths; 1,918 sq. ft. * Purchase price (5/16/90): $205,000 * New assessed value: $197,000 * Percent change: -3.9% * Old property tax: $2,050 * New property tax: $1,970 * Savings: $80 4) Culver City * House built in 1952; 4 bedrooms, 3 baths; 1,918 sq. ft. * Purchase price (6/28/90): $420,000 * New assessed value: $371,000 * Percent change: -11.7% * Old property tax: $4,200 * New property tax: $3,710 * Savings: $490 5) Palos Verdes Estates * House built in 1951; 4 bedrooms, 2 baths; 2,322 sq. ft. * Purchase price (5/11/90): $677,500 * New assessed value: $565,000 * Percent change: -16.5% * Old property tax: $6,775 * New property tax: $5,650 * Savings: $1,125 6) Long Beach * House built in 1952; 4 bedrooms, 2 baths; 1,987 sq. ft. * Purchase price (5/31/90): $258,000 * New assessed value: $232,000 * Percent change: -10.1% * Old property tax: $2,580 * New property tax: $2,320 * Savings: $260 7) West Covina * House built in 1954; 3 bedrooms, 2 baths; 1,878 sq. ft. * Purchase price (4/5/90): $260,000 * New assessed value: $234,000 * Percent change: -10.0% * Old property tax: $2,600 * New property tax: $2,340 * Savings: $260 8) Van Nuys * House built in 1965; 3 bedrooms, 2 baths; 1,934 sq. ft. * Purchase price (3/16/90): $274,000 * New assessed value: $227,000 * Percent change: -17.2% * Old property tax: $2,740 * New property tax: $2,270 * Savings: $470 9) Encino * House built in 1966; 3 bedrooms, 3 baths; 2,030 sq. ft. * Purchase price (4/5/90): $502,000 * New assessed value: $403,000 * Percent change: -19.7% * Old property tax: $5,020 * New property tax: $4,030 * Savings: $990 Source: Los Angeles County Assessor’s Office
