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Property-tax hikes ahead, San Diego

County assessors to crank up fees following post-bubble reductions

A statewide window to appeal property-tax assessments has officially opened, though many San Diegans will likely end up displeased with massive spikes in their annual tax bills.

California's Prop 13, passed in 1978, limits annual property-tax increases to 2 percent. During the recent implosion of the late-2000s housing bubble, however, many property owners successfully lobbied to have their properties re-assessed, saving hundreds or thousands of dollars in the process.

A lesser-known provision, Prop 8 (also passed in 1978), allows for this reduction in assessments during down years but also provides the means for county assessors to quickly crank up the fees as real estate values recover, at least until they reach the previously determined cap rate based upon the most recent sale price.

As real estate prices — climbing as much as 20 percent in the past year in some suburban areas — approach their previous peaks, many area homeowners who bought into the bubble in the mid-2000s and subsequently sought tax relief will be receiving re-assessment notices in the coming weeks.

Property owners in San Diego County have until December 1 to submit an appeal to the county if they disagree with their new bills.

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Comments
11

I have no sympathy for these folks, they knew what the tax rate was when they bought the property and have paid a reduced rate for years, now they gripe because their assessment is returning to what it should have been all along. Many of the components of Prop 13 & 8 should be repealed.

July 28, 2014

So does the re-reassessment re-level at the same pre-reassessment Prop 13 limit, or does will jump up the same way it jumped down? Did they lose their Prop 13 limits forever? In other words, did people who were enriched by the financial disaster end up getting their assesses in a sling?

July 28, 2014

Your question isn't crystal clear, but I think you are asking if the assessed value can jump back up as soon as the assessor thinks the market value has recovered. And the answer is yes. As far as I know, the Prop 13 limits are set at the time the property was last sold, whenever that was, and stay in place until it sells again. Dave is describing how some folks who got big reductions in assessed values and the tax reductions that went along with them are now going to see the values back at the levels they (over)paid some years ago, and will get very large increases in the tax bills.

July 28, 2014

Good assessment, Visduh. Say someone paid $500,000 for a house, and its value tumbled to $300,000. Prop 13 would protect the $500,000 value from being re-assessed at more than 2% per year, but if they got a re-assessment down to $300,000 to save money when the market tanked, the value can shoot right back up to the established $500,000-plus-2%-per-year base as quickly as comparable sales can justify it. Once they're back at their Prop 13 cap, they're again protected by the 2% rule.

July 28, 2014

This is fair: during the years when a property's market value was much lower than the assessed value reflecting the high purchase price they paid (being "under water"), the lowered assessment helped ease the owner's tax burden while paying a high-priced mortgage. Theoretically, it also made it easier for the owner to sell the property. Now that the property's market value is back to what it was (or possibly more) when the owner bought, the original assessment can be fairly restored. A lot of very savvy investor-owners took advantage of the County's offer to lower assessments after the RE bust. Time to pay a fair share again.

July 28, 2014

I still don't get it. Weren't a disproportionate percent of speculators' risks covered by other property owners' contribution? It seems unlikely that it saved many homeowners who couldn't make their monthlies, which were orders of magnitude greater than the annual property tax. It was a convenient way for "savvy" speculators to bail out of a disappointing deal. But what if you had no where else to live? How long could they last underwater? And now their taxes are back up.

July 28, 2014

I know from looking at many County Treasurer-Tax property records, SDLookup, and/or Zillow, to see what was paid vs. what the current assessments are, for properties in some of the poorer neighborhoods surrounding downtown, that many of the buyer-investors have enjoyed several years of tax savings by getting their assessments lowered. Wealthy investor-type people always do this kind of penny-pinching saving, not because it is necessary to save their ass, but because it is a life-style habit of increasing their wealth. They can afford to wait till the market turns up to make another move.

July 28, 2014

I had a noticeable increase in my tax bill LAST year and I appealed it, but haven't heard a thing from tax collector Dan McAllister's office. I never got any reassessments either -- just kept paying and paying. But last year there was a spike. I will call tomorrow.

July 28, 2014

If you pulled permits for improvements such as an addition or major remodel, that could also trigger an upward adjustment. Not sure how your bill would spike otherwise.

July 28, 2014

Monaghan, the annual Assessment Notifications are issued through the Assessor/Recorder's Office, not the Tax Collector. The Tax Collector won't have access to the fiscal year 2014/2015 tax bill info until late September. There was an increase for many last year due to a new voter approved Unified School District Bond - compare your tax rate (and assessment value) on your 2012/2013 property tax bill to the same on your 2011/2012 bill. Many homeowners also saw an increase when sewer collection charges were included with their annual fees (the water department asks the Auditor to add this charge to the tax bill for collection as opposed to collecting the fees separately). Not everyone will have a massive increase - properties that were already below the fair market value for assessment purposes under Proposition 13 will see the usual 2% increase, perhaps less. The application forms for the Review of Assessment and Assessment Appeals very clearly state that if the application is approved that the reduction in value is a temporary measure. However, the 2% annual increase of a property's assessment value has been in place since the passage of Proposition 13 in the late 1970's.

July 29, 2014

You mentioned that the annual increase would be 2%, "perhaps less." This most recent go-round actually was less than 2%, even less than 1%. That arose due to the California CPI increasing hardly at all in the most recent measurement. Say what? Yes, the way CPI is measured, it can show declines or tiny increases when "any fool can plainly see" that the actual cost of living is increasing steadily. Heck, local water bills by themselves can account for more than the measured index! The current CPI calculation is skewed, by design, to ignore many elements of the true cost of living as experienced by most of us. That was done to keep Social Security benefit increases low and other things indexed to the CPI from increasing realistically. But now, when the feds benefit, other governmental bodies, such as states and localities, don't get their boosts. Boo hoo.

July 30, 2014

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A statewide window to appeal property-tax assessments has officially opened, though many San Diegans will likely end up displeased with massive spikes in their annual tax bills.

California's Prop 13, passed in 1978, limits annual property-tax increases to 2 percent. During the recent implosion of the late-2000s housing bubble, however, many property owners successfully lobbied to have their properties re-assessed, saving hundreds or thousands of dollars in the process.

A lesser-known provision, Prop 8 (also passed in 1978), allows for this reduction in assessments during down years but also provides the means for county assessors to quickly crank up the fees as real estate values recover, at least until they reach the previously determined cap rate based upon the most recent sale price.

As real estate prices — climbing as much as 20 percent in the past year in some suburban areas — approach their previous peaks, many area homeowners who bought into the bubble in the mid-2000s and subsequently sought tax relief will be receiving re-assessment notices in the coming weeks.

Property owners in San Diego County have until December 1 to submit an appeal to the county if they disagree with their new bills.

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Comments
11

I have no sympathy for these folks, they knew what the tax rate was when they bought the property and have paid a reduced rate for years, now they gripe because their assessment is returning to what it should have been all along. Many of the components of Prop 13 & 8 should be repealed.

July 28, 2014

So does the re-reassessment re-level at the same pre-reassessment Prop 13 limit, or does will jump up the same way it jumped down? Did they lose their Prop 13 limits forever? In other words, did people who were enriched by the financial disaster end up getting their assesses in a sling?

July 28, 2014

Your question isn't crystal clear, but I think you are asking if the assessed value can jump back up as soon as the assessor thinks the market value has recovered. And the answer is yes. As far as I know, the Prop 13 limits are set at the time the property was last sold, whenever that was, and stay in place until it sells again. Dave is describing how some folks who got big reductions in assessed values and the tax reductions that went along with them are now going to see the values back at the levels they (over)paid some years ago, and will get very large increases in the tax bills.

July 28, 2014

Good assessment, Visduh. Say someone paid $500,000 for a house, and its value tumbled to $300,000. Prop 13 would protect the $500,000 value from being re-assessed at more than 2% per year, but if they got a re-assessment down to $300,000 to save money when the market tanked, the value can shoot right back up to the established $500,000-plus-2%-per-year base as quickly as comparable sales can justify it. Once they're back at their Prop 13 cap, they're again protected by the 2% rule.

July 28, 2014

This is fair: during the years when a property's market value was much lower than the assessed value reflecting the high purchase price they paid (being "under water"), the lowered assessment helped ease the owner's tax burden while paying a high-priced mortgage. Theoretically, it also made it easier for the owner to sell the property. Now that the property's market value is back to what it was (or possibly more) when the owner bought, the original assessment can be fairly restored. A lot of very savvy investor-owners took advantage of the County's offer to lower assessments after the RE bust. Time to pay a fair share again.

July 28, 2014

I still don't get it. Weren't a disproportionate percent of speculators' risks covered by other property owners' contribution? It seems unlikely that it saved many homeowners who couldn't make their monthlies, which were orders of magnitude greater than the annual property tax. It was a convenient way for "savvy" speculators to bail out of a disappointing deal. But what if you had no where else to live? How long could they last underwater? And now their taxes are back up.

July 28, 2014

I know from looking at many County Treasurer-Tax property records, SDLookup, and/or Zillow, to see what was paid vs. what the current assessments are, for properties in some of the poorer neighborhoods surrounding downtown, that many of the buyer-investors have enjoyed several years of tax savings by getting their assessments lowered. Wealthy investor-type people always do this kind of penny-pinching saving, not because it is necessary to save their ass, but because it is a life-style habit of increasing their wealth. They can afford to wait till the market turns up to make another move.

July 28, 2014

I had a noticeable increase in my tax bill LAST year and I appealed it, but haven't heard a thing from tax collector Dan McAllister's office. I never got any reassessments either -- just kept paying and paying. But last year there was a spike. I will call tomorrow.

July 28, 2014

If you pulled permits for improvements such as an addition or major remodel, that could also trigger an upward adjustment. Not sure how your bill would spike otherwise.

July 28, 2014

Monaghan, the annual Assessment Notifications are issued through the Assessor/Recorder's Office, not the Tax Collector. The Tax Collector won't have access to the fiscal year 2014/2015 tax bill info until late September. There was an increase for many last year due to a new voter approved Unified School District Bond - compare your tax rate (and assessment value) on your 2012/2013 property tax bill to the same on your 2011/2012 bill. Many homeowners also saw an increase when sewer collection charges were included with their annual fees (the water department asks the Auditor to add this charge to the tax bill for collection as opposed to collecting the fees separately). Not everyone will have a massive increase - properties that were already below the fair market value for assessment purposes under Proposition 13 will see the usual 2% increase, perhaps less. The application forms for the Review of Assessment and Assessment Appeals very clearly state that if the application is approved that the reduction in value is a temporary measure. However, the 2% annual increase of a property's assessment value has been in place since the passage of Proposition 13 in the late 1970's.

July 29, 2014

You mentioned that the annual increase would be 2%, "perhaps less." This most recent go-round actually was less than 2%, even less than 1%. That arose due to the California CPI increasing hardly at all in the most recent measurement. Say what? Yes, the way CPI is measured, it can show declines or tiny increases when "any fool can plainly see" that the actual cost of living is increasing steadily. Heck, local water bills by themselves can account for more than the measured index! The current CPI calculation is skewed, by design, to ignore many elements of the true cost of living as experienced by most of us. That was done to keep Social Security benefit increases low and other things indexed to the CPI from increasing realistically. But now, when the feds benefit, other governmental bodies, such as states and localities, don't get their boosts. Boo hoo.

July 30, 2014

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