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Property Tax Relief Really Find out the Truth about Lower Property Taxes by Valerie Faltas
Prop 8 Reduction is supplement or exemption to Prop 13 which still applies today to all homeowners in California. Prop 13 was put into place in 1978 to control the amount of property taxes paid by homeowners. Prop 8 Exemption is an exemption to Prop 13 which states that your assessed value should not be higher than market value for any given year. So when the market is declining like it today has dipped below your current assessed value you are entitled to some relief.
This appears to be good information yet it only a TEMPORARY answer. Prop 8 is usually something you have to file for. The way Prop 8 works is like this your date for the current fiscal year is January 1st for your property taxes. So the comparable sales for your property 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 Prop 8 Decline in Value reduction for 2009 the comparable sales need to have closed between January 1st 2009 March 31 2009. to qualify for 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.
This is major problem for many 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 third quarters of the year you can't use those sales for a Prop 8 reduction.
This is not a great solution because it only a SHORT TERM reduction in value so when the real estate market goes back up it always does your assessed 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 form Assessor which they are not unfortunately people 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 illustrate the way Prop 8 Exemption works on an average home in California. I purchased a property 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 beginning of 2008 is close to $430,000 since I am a knowledgeable homeowner I apply for a Prop 8 Reduction to get a reduction. So for 2008 I have a break Im paying on a value that is $100,000 below my trended base value saving around $1,250 The real estate market goes down based on the Assessors review the Prop 8 Decline value is given for 2009 also. 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 so I am saving about $1,390 Great
Now the real estate market starts to turn around the market values are going up for 2010 my market value is upwards of $500,000 so the Assessor's Office alters my Prop 8 Decline value to $500,000 which is lower than my 2010 trended base value of $552,040. Absolutely not as good as having $430,000 as my value. Yet I am still saving this year my Prop 8 Reduction 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 now my market value is somewhere around $600,000 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
California Property Tax Law offers a way to PERMANENTLY reduce your property taxes with today's declining real estate market based on Prop 13 essentially avoiding the Prop 8 Exemption all of its limitations. In addition find out how to avoid reassessment when you inherit property how to use the exemptions allowed by Current Property Tax Law 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 trusts investing much more. She is Certified Property Tax Appraiser Licensed Residential Appraiser a member of the International Association of Assessment Officers. As a real estate investor advisor she is well versed in all aspects of real estate. to contact Valerie Faltas go to her website propertytaxlittleblackbook. com
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