(Special thanks to blog reader Kimberley S. for suggesting this topic…)
It’s pretty obvious how the recent decline in home values has benefited buyers who have been trying to get a home in this area. Homes that were once out of reach are now suddenly affordable — it’s a buyer’s market, after all. But while this has been a windfall for home buyers, is there any sort of a “silver lining” in this for people who already own homes? Possibly…
The passage of (the other) Proposition 8 years ago allows homeowners to apply for a reduction in their property taxes if the homeowner feels the market value of their home has fallen below the “assessed value” that is stated on their tax bill. The San Mateo County Tax Assessor’s Office actually offers an online form on their website that makes it easy to appeal your assessment: Click here: “Decline In Assessed Value” Application Form. If the County agrees that your home has been assessed at more than it is worth, your next tax bill will be reduced accordingly.
Here are a few things to keep in mind…
- If you’ve owned your home for more than 5 years, you probably won’t benefit from this. Why? When you purchased your home, the property tax assessment was reset at essentially the price you paid for your home. Proposition 13 caps the increase in property tax assessment to a maximum of 2% per year, regardless of the appreciation of your home’s value. So even though your home may have lost some value this past year, it’s very likely that in the time that you’ve owned your home it has increased in value at a much greater rate than 2% annually. So you’re probably still “ahead of the curve” and your home is still worth more than the assessed value. (It’s still worth researching, though.)
- If you are granted a reduction in your assessment, bear in mind that this reduction is temporary. The Assessors office will automatically re-assess your home every January and adjust the taxes accordingly until such time that they catch up with the original assessment.
- Your new “Prop 8 Value” is not subject to the same restrictions as it would be under Proposition 13. This means that the Assessor can increase your taxes by MORE than 2% each year until it matches the originally assessed value. Once the Prop 8 value reaches the original assessed value, the rules of Prop 13 kick in once again.
- Be sure to consult a tax attorney or CPA to fully understand how these laws may impact you. Everyone’s situation is unique.
So, the big question that I pose to San Carlos residents is…
Has anyone tried this yet? Was it a success or failure?
I have already heard of one case that was denied. Let us know by posting a comment below!
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