Tax rates in California are based on purchase price, which assessor uses as the assessed value. For that reason, you can have one property assessed at current market value, and the one next door assessed at a much lower value. The rate at time of purchase is 1.25% of the sale price.
If the property declines in value, you can petition for a reduction in assessed value on an annual basis.
In addition, some properties have been selected by the County Assessor to be automatically reviewed. 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 value as of January 1. The assessed value is the value shown on your most recent property tax bill.
Typically, an application is required to initiate a review of your propertyâ€™s value by the Assessor. However, in 2008 the Los Angeles County Assessorâ€™s Office began doing a proactive review of single-family residences and condominiums based on an analysis of market trends in Los Angeles County. For 2008, single-family residences and condominiums purchased between July 1, 2004, and June 30, 2007, were reviewed. For 2009, the review was expanded to include single-family residences and condominiums purchased between July 1, 2003, and June 30, 2008. For 2010, the review included single-family residences and condominiums purchased between July 1, 2003, and June 30, 2009. In some particularly hard-hit areas of the county, the review included properties purchased prior to July 1, 2003.
The 2009 proactive review included 473,000 properties, resulting in lower assessments on 333,000 single-family residences and condos. The average reduction in assessed value was about $120,000, amounting to an average property tax savings of approximately $1,300.
Deborah Bremner, SFR, CRS, CSP
Certified Short Sale Professional
Certified Home Retention Specialist
Blogging at: http://TheBremnerGroup.com/blog