Will Your Property Taxes Go Down If Your Value Drops?

One common story during the past year of home price declines is how homeowners can go to their local tax assessors office and ask for their property to be re-assessed. In many counties across the country, it’s not as big of a deal because the assessors offices reassess properties quarterly or annually anyway based on current values. Because of Proposition 13 in California, property taxes are reassessed annually—but only to make small adjustments to assessed value and tax rates to keep up with inflation. It is Proposition 8 that allows assessed values to be reduced when market prices drop—so when prices drop, many homeowners contact their local offices.

The deadline to file an ‘informal request’ for a new assessed value is Friday (August 15) and ‘formal requests’ are due September 15. So far the assessors office has processed 285 of 1000 ‘informal’ requests. The reason for the deadlines is so the county can have time to generate 2008-2009 tax bills for mailing in October. As the ‘informal’ and ‘formal’ names might suggest, this is a bureaucratic process, so be prepared to fight it every step of the way. The San Francisco Chronicle covered the property tax assessment appeal story today, and below are some important excerpts:

The requests come as the number of home sales and housing prices continue to fall in many San Francisco neighborhoods. The city’s median home sale price fell nearly 12 percent between May 2007 and May 2008, according to the city controller. Despite those decreases, Ting announced Wednesday that the city’s overall property values, including commercial and residential properties, increased by $11.4 billion, or 8.7 percent, from 2007 to 2008.

Some people have started businesses to help property owners appeal for a lower valuation. Joshua Carnes, vice president of operations for the Sacramento-based Prop8.org, said anyone who bought a home in the past few years should expect the assessed value of the property to decrease. The company is named after Proposition 8, the 1978 voter initiative that allowed home values to be reduced when there is a dip in market values.

Here are forms to apply for a formal review before the assessment appeals board. Those requests must be filed by Sept. 15.