Fall Real Estate 2007

Publication Date: Friday, October 12, 2007

Taxes going down?
Homeowners can appeal for home reassessments from the county assessor

by Andrea Wang

Close to 600 Mountain View homeowners had their property taxes lowered this year, and they weren't alone. Some of them had their reassessments done automatically by the county assessor, but others had to request a tax reduction.

The county assessor isn't insensitive to homeowners who are paying 10 times more than their neighbors in property taxes. In explaining why two homes -- modeled the same, on the same block, built by the same developer -- could have such drastically different values, Santa Clara County Assessor Lawrence E. Stone spoke about his own neighborhood.

Stone purchased his home in 1975 with the base value of $90,000, meaning he had to pay around $900 in property taxes a year. However, Stone's neighbor, who moved into a similar house on the same block, pays around $15,000 in property taxes because the market value of that home was $1.5 million at the time of purchase, in 2003.

In all, this year the county lowered assessed values on around 18,000 properties. About 900 of those were commercial properties while the other 17,000 were residential. Out of those, there were 231 homes from Los Altos, 91 from Los Altos Hills, 280 from Palo Alto and 594 from Mountain View.
The county specifically checks for properties whose market values drop below their assessed ones. In lowered assessed values alone, the county took about $5 billion off the assessment roll this year, $.68 billion of which was from the four north-county cities.

Since the voters passed Proposition 13 in 1978, homeowners in California have been paying 1 percent of the property's purchase price in taxes every year. Stone said that because of special debts, such as additional school bonds, the taxpayer will actually pay from 1.15 percent to 1.25 percent of the assessed value.

Although these taxes are slightly raised annually, Proposition 13 assures property owners that the assessed value of their property cannot be inflated more than 2 percent per year.

The assessed property value is based on the value of the property either at the time of the owner's acquisition, or after new construction has been done. Market value is how much one could sell the house for. This value differs from the assessed value of property because it can be raised or lowered drastically, depending on the market, while the assessed value cannot.

Though the county assessor cannot significantly raise the assessed value, property owners themselves can considerably change the value by adding onto, or radically modifying, their property. For example, simply remodeling a kitchen will not contribute to a reassessment, but adding or expanding rooms, or even moving walls within the house, will cause the assessed value to increase.

"If you add square footage to your house, then we will add (to) your existing assessment the fair market value of what you add," Stone said.
According to Stone, the average market value in Santa Clara County of a single-family home is around $800,000, and the average assessed value is around $400,000. This means a property owner is paying close to $4,000 -- excluding special debts -- in property taxes on average annually.

For property owners who feel they are paying too much in property taxes, the passage of Proposition 8 in 1978 allows property owners to appeal for lowered tax assessments. Stone said the process of requesting a tax reduction is actually quite easy.

Every May, the county assessor mails assessment cards to property owners. Each card informs the owner what the assessed value of their property will be when the assessment roll closes in July. On the card, there are also specific instructions explaining what property owners should do if they feel that the assessed value of their property is higher than it should be.

To request a tax reassessment, property owners must either call or go to the county assessor's office or visit the Web site and fill out a simple, one-page Prop 8 Assessment Review Request Form. Owners then must submit the form through fax, mail or at the front counter of the office. This should be done before June 15 in order to give the county assessor time to evaluate the requests.

If the county assessor approves the request, the property owner will receive a tax reduction. If the request is denied, the property owner can file a reduced assessment appeal between July 2 and Sept. 15.

"Unfortunately, the county adopted a $30 filing fee this year for assessment appeals, and there is also a two-year statute of limitation," Stone said. "This means if we don't get (the tax reassessment) resolved between the property owner and the assessor, and it doesn't go to a hearing, then the taxpayer's opinion value holds."

However, within these two years, the taxpayer still must pay the original tax listed on the assessment card. If and when the reassessment happens, the county assessor will refund the money -- with interest -- back to the owner.

According to Stone, Santa Clara County has the lowest numbers of appeals in the whole state, and is also the first county ever to mail assessment cards to property owners. The county assessor receives three to four thousand appeals every year.

More than half of those who filed appeals end up retracting their requests because they simply did not understand the system, Stone said, adding that about 30 percent of the original applicants receive tax readjustments because they had legitimately been over-assessed.

When a reassessment does occur, it is, however, only for that one year the taxpayer asked for a tax reduction. The next year, the county assessor reviews the assessment values again and will readjust the value accordingly.

For more information about tax reassessments, visit www.scc-assessor.org.

Editorial Intern Andrea Wang can be e-mailed at awang@paweekly.com.