Decline in Value Information
In 1978 California voters passed a constitutional amendment (also known as "Prop 8") 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 what the current assessed (taxable) value would be under Proposition 13 as of January 1, which is the date set by law for determining the coming year assessment.
For more information on this and decline-in-value information please see:
The State Board of Equalization’s website
For the 2016/2017 tax year (for taxes that will become due December 2016 and April 2017), the Assessor’s Office has completed the mandated annual review of all the properties for which the values were previously reduced due to the decline in market value. We compared the fair market value as of January 1, 2016 (this date is set by law) vs. what the assessment would be under Prop 13.
If your property assessment was reduced or changed for this year (except for the 2% CPI increase) you should receive a "Notice of Assessment" from our office. Your 2016/2017 tax bill, which will be mailed in October, will be based on the assessed value indicated on the notice.
If you feel the value indicated is a fair indication of the market value as of January 1, 2016, no further action is necessary.
Up until September 15, 2016, we accept "Informal Request for Review" forms for the 2016/2017 assessment year. For those who have filed forms prior to September 15, 2016, you should receive a response from our office by October 31, 2016. If you have not received a response by then, you may need to file a formal appeal.
We will stop accepting informal review requests after September 15, 2016. Because of the added workload, we cannot guarantee we will provide a response prior to the formal appeals deadline - November 30, 2016. To file a formal appeal, contact the
Clerk of the Board.
You can find more information about formally appealing your assessment on the
State Board of Equalization’s website.
If you purchased your property after January 1, 2016:
If the taxable value shown on the "Notice of Assessment" that you receive in July is an amount other than your purchase price (if it is fair market value), an adjustment will be made on the supplemental roll when the change in ownership is processed and you will receive a "Notice of Supplemental Assessment". Your regular 2016/2017 tax bill will be based on the value shown on the "Notice of Assessment" and should be paid as issued.
If the new "Base Year Value" shown on the Notice of Supplemental Assessment is less than the 2016/2017 taxable value, you will receive a supplemental refund. 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 supplemental refunds are processed.
If you purchased your property before January 1, 2016:
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. They are reviewed and adjusted annually but will not exceed what the Proposition 13 value would be.
What's My "Assessed Value?"
You may wonder why the assessed value of your property as shown on the “Notice of Assessment” we recently sent out to you, or on your tax bill, went up more than 2 percent?
The answer is in the way property is assessed under Proposition 13. Generally speaking, the assessed value of your property under Proposition 13 is established when you either buy or build your property. This is called the "base year value". This base year value increases every year by an inflation factor (California Consumer Price Index-CCPI) or 2%, whichever is less, 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. However, if the assessed value is greater than the market value of the property as of January 1, the property owner may request a review for a Prop 8 temporary reduction. If a reduction is warranted, the Assessor’s office will then review the property value annually to determine the market value, as of January 1, until the market value is equal to or greater than the factored base year value. This annual review may result in increases to Prop 8 values in excess of 2%.
For example, look at the chart below. If you purchased your home in Year 1 for $200,000, the base year value is $200,000 (Prop 13). By Year 2, the actual market value of your property had increased to $250,000 but the assessed value, limited by 2% annual increases, had only increased to $204,000. So your property tax was based on $204,000 (Prop 13). In year 3, the market value of the property falls below the factored base year value and so the property is assessed at market value (Prop 8). The property is reviewed annually as mandated for its market value on January 1 and as long as the market value is lower than the assessed value, the market value will be assessed. However, when at some time in the future the market recovers and the market value is once again above the factored base year value, the assessed value will be the factored base year value (Prop 13). For example, in this case the market has rebounded to $300,000 in Year 7 but the factored base year value is $225,232 (Prop 13). The assessed value would be the lower of the two, the Prop 13 value.
Last year, approximately 35,000 properties were assessed at the market value (Prop 8), which was less than the Prop 13 value. This year the market has continued to improve and consequently, an additional 8,000 properties are back to being assessed at the Prop 13 value. Approximately 27,000 properties are still being assessed at the market value instead of the Prop 13 value because we have determined that the market value is still less than the Prop 13 value.
If you have evidence that indicates the fair market value of your property as of January 1, 2016 is lower than your current assessed (taxable) value you may file a "2016/2017 Informal Request for Decline in Market Value Review Application" through September 15, 2016 with the Assessor's Office. You can find the online Informal Review form on the
Assessor’s Home page. Regardless of the results of that review, property owners are entitled to file a formal assessment appeal application through November 30, 2016 with the Clerk of the Board. You can find the formal assessment appeal application on the
Clerk of the Board’s website or you can request a formal appeal application by contacting the Clerk of the Board’s office at (209) 468-2350.