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Decline In Value Information |
In 1978
California
voters passed a constitutional amendment that allows a temporary reduction in
assessed value when a property suffers a “decline-in value.”
A decline-in-value occurs when the current market value of your property
is less than the assessed (taxable) value as of January 1.
Click here for more information on Prop. 8 and
decline-in-value.
Typically a request is necessary to
initiate a review of your property value by the Assessor.
However in 2008, recognizing the need, a proactive review of properties
was instituted. For the 2009/2010
tax year, that proactive review was expanded to include all single family
residences and condominiums, as well as many multi-family dwellings, apartments
and commercial and industrial properties.
If your property value was reduced, you should have received a
Notice of Changed Assessment by the
end of July 2009.
If you were satisfied with the results of
your decline-in-value review, no further action was necessary.
Your 2009/2010 tax bill was based on the taxable value indicated on the notice
you received in July.
Applications for Informal Decline In Value Review are no
longer being accepted for the 2009/2010 property values. If you have
submitted an Informal Decline in Value Application, the reviews are currently
being processed and you will be notified of the results by mail. If
you received notification that your value will be lowered as a result of the
reviews, but the current tax bill that you received in October does not reflect
the change, a tax correction will be generated and a revised bill issued.
If you do not receive the revised bill before the December 10th deadline, you
are advised to pay the first installment. A revised second installment
then will be issued reflecting both the reduction in assessed value and the
overpayment on the first installment.
If you believe that you have evidence that the market
value of your property on January 1, 2009, was less than the taxable
value indicated on your 2009/2010 tax bill, you may file an appeal with the
Clerk of the Board prior to
November 30, 2009. (For general information on Assessment
Appeals
click here, or if you wish to download an application
click here) When your appeal is scheduled, you then will have the
opportunity to present your evidence in a formal hearing before the Assessment
Appeals Board.
If you purchased your property after January 1, 2009:
If the taxable value shown on your Notice
of Changed Assessment is an amount other than your purchase price, an adjustment
will be made on the supplemental roll.
Your 2009/2010 tax bill will be based on the value shown on the Notice of
Changed Assessment and should be paid as issued.
Once we have processed your deed, we will send you a Notice of
Supplemental Assessment.
If the new Base Year Value shown on the
Notice of Supplemental Assessment is less than 2009 taxable value, you will
receive a supplemental refund from the San Joaquin County Auditor/Controller’s
Office. The supplemental refund
will be pro-rated to cover the number of months during the tax year that you
owned the property. It will not be
necessary to file an appeal or an
Informal Decline-in-Value Review Application; however, it does take several
months from the time a deed is recorded until the Auditor’s Office is able to
process supplemental refunds.
If
you purchased your property before January 1, 2009:
Decline-in-value reductions are
temporary reductions that are made because the market value of your property has
dropped below its Proposition 13 value (factored base year value).
If your assessed value has been reduced, the value of your property will
be reviewed as of January 1st every year until its market value is
greater than its Proposition 13 value.
At that time the Proposition 13 value will be restored.
Properties adjusted due to a decline in
value are not subject to the 2% annual increase limitation imposed by
Proposition 13.
Examples of Assessments Involving Properties Declining in
Value:
Example #1
Home purchased May 2008 for $400,000.
$400,000 is enrolled as the property’s 2008 Base Year Value
The factored base year value (Proposition
13 Value) on
January 1, 2009,
is $408,000 (Base Year Value x 1.02 inflation factor).
However, the market value on January 1, 2009, is $350,000,
so the 2009 Taxable Value is $350,000.
The factored base year value (Proposition
13 Value) on
January 1, 2010,
is $416,160 (Base Year Value x 1.0404 inflation factor for two years).
However, the market value on
January 1, 2010, is
$380,000, so the 2010 Taxable Value is $380,000.
The factored base year value (Proposition
13 Value) on
January 1, 2011,
is $424,483 (Base Year Value x 1.0612 inflation factor for three years).
The Market Value on January 1, 2011, is $430,000,
which is more than the Proposition 13 Value, so the Proposition 13 value of
$424,483 is restored for 2011 and the property is removed from the annual
decline-in-value review form.
Example #2
Home is purchased in 1994.
The 1994 Base Year Value is $160,000.
On January 1, 2009, the Proposition 13 value
is $211,142. The market value is
$300,000, which is more than the Proposition 13 value, so the Proposition 13
value of $211,142 is enrolled as the 2009 taxable value.
On January 1, 2010, the Proposition 13 value
is $215,365 and the market value is $250,000.
Even though the market value has decreased by $50,000, it is still more
than the Proposition 13 Value, so the Proposition 13 value is enrolled as the
2010 taxable value.
What's
My "Assessed Value"?
If you own a single family home
or condo in San Joaquin
County, you may wonder why
the value of your property as shown on the property tax bill probably went up by
2% from last year. You might wonder, “how is this possible when real estate
values are dropping”.
The answer is in the
way property is valued under Proposition 13. Generally speaking, the assessed
value of your property under Proposition 13 is established when you either buy
or build you property. This is called the "base year value". This base year
value can only increase by 2% each year, even if the market value of the
property increases at a significantly higher rate. In a rapidly increasing real
estate market, like we experienced in the early to mid 2000's, the difference
between the assessed value of your property and the actual market value can be
substantial.
For
example, look at the chart below. If you purchased your home in 2000 for
$150,000, the base year value is $150,000. By 2006, the actual market value of
your property had increased to $415,000 but the assessed value, limited by 2%
annual increases, had only increased to $168,924. In 2006, the market value of
your property began to drop. Even though the drop was significant, all the way
down to $270,000 by 2008, it was still more than the 2008 assessed value of
$175,749. The value declines continued through 2008 and even though the market
value declined substantially the assessed value may have increased 2 percent.
As long as the market value, in this case $195,000, is still above the assessed
value, $179,264, your property will be assessed at the “Factored Base Year
Value”. If at some point in the future, the market value of your property drops
below the assessed value, the 2% will not be applied and the actual market value
of your property will be the assessed value for that year.
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