How To Lower Your Property Taxes: An Inside Look At How Property Assessors Screw Homeowners

Spring Blooming Cherry BlossomsYour property assessors’ #1 goal is to collect as much property tax from you as possible. Your goal as a homeowner is to make your home look like the dumpiest of dumps to pay the least amount of property tax possible. An asteroid could wipe out your entire city, but if the assessors office survives, they will come for you to collect!

Ever since the downturn, I’ve religiously filed a property tax appeal to get my assessed value lowered. In the midst of the financial crisis I was shocked that the assessors office appraised my primary residence for $100,000 more. If they got away with it, I would have paid roughly $1,200 more in property taxes that year. I ultimately won my appeal three months later and kept my assessed value the same as before.

For the next three years I got more aggressive and managed to lower my assessed value $100,000 below my purchase price. When the world is falling apart, it’s an easy sell to say your property’s value is also going down the tubes. In fact, my goal is to get the city to assess my property as close to $0 as possible.

Now that real estate is roaring back, I’m having a much harder time convincing the city I live in a rundown shack. This post will highlight how I almost got screwed over by the San Francisco property assessor again, and how I fought back and came to a compromise. Just like how every homeowner should be taking action to refinance their mortgage, every homeowner should take action by filing property tax appeals!

A CONVERSATION WITH AN ANGRY PROPERTY ASSESSOR EMPLOYEE

I filed a property tax value appeal in the spring of 2012 because the City raised my property’s assessed value by a whopping $270,000. That’s equivalent to roughly 100,000 packs of the highest quality ramen noodles. If I ate a generous three packs a day, that would be 91 years of sustenance.

A $270,000 higher assessed property value leads to roughly $3,000 more in property taxes. The reason the jump was much higher than the 2% max increase as stated by Prop 13 is because I got reset back to my original purchase price plus an extra 1.8% increase for the latest calendar year. If you ever want to know what tyranny looks like, this is it. If I don’t pay the increase, my credit score will get crushed, I’ll have to pay fines, and will ultimately have to go to jail. Ain’t power grand?

Undaunted, I went to Zillow.com to get 10 comparables at lower price/sqft levels than my house between October 2011 and March 2012 to keep my assessed value down. I filled out the application, attached a $60 mandatory appeals check, and waited.

Five months later, I finally get a letter in the mail saying they have acknowledged receipt of my application for appeal. The letter then goes on to state that I will be notified by mail 45 days in advance of my scheduled hearing date. Meanwhile, there are no specifics of when that hearing date might be! I call the SF Assessment Appeals Board at 415-554-6778, and a supremely pissed off lady answers the phone. Before letting me ask my questions, she tells me exactly what I want to know.

Before you ask anything, hear me out because I’ve been answering this question all week. Times have changed. What used to take two to three months to schedule a hearing or reduce your assessed value now takes up to two years! At some point next year, you will get another letter from us with your scheduled hearing date. IF you win your appeal, the city has another nine months to refund your property tax overage. Meanwhile, you are required by LAW to pay your property tax this year, no matter how wrong the valuation is!

She goes on to say…..

You are lucky you filed a 2012-2013 property tax appeal in the first place. There are thousands of people who naively assumed the City would lower or keep their assessed values the same because the economy is still on shaky ground. Some people have seen their home’s valuations increase by $1 million and there is nothing they can do about it but pay the extra $11,500 in property taxes!

Finally…..

My boss, Phil Ting’s job is to collect as much property tax from the public as possible, no matter the economic environment. He will never get voted out because only 30% of San Franciscans own property. The measures he puts in place raises property taxes for homeowners and redistributes the funds towards other programs for those who don’t pay.

I quizzically ask, “So you’re saying I should sell my house and live off the backs of others? Who should I vote for?

She replies, “You are not listening to me. 65-70% of San Franciscans are renters. They will always vote to raise property taxes since they don’t have to pay for them. This is the way the city gets more funding for public works and for teachers, regardless of whether the homeowner has children or uses public works at all. It’s obviously better to be a homeowner, but my boss’ sweet words will keep him in office forever!

The lady was pissed because she was bearing the brunt of all these angry homeowner phone calls. Appeals have gone from 1,600 a year to 6,000 a year, while the number of people in her office has stayed the same! She hates her boss and is ultimately on our side.

STEPS TO LOWER YOUR PROPERTY TAXES

* Google “<Your City’s Name> assessor’s office.” It’s important you proactively find out what the city/county is assessing your property first before you get your bill. You need as much time to prepare for battle.

* Go to their contact page and call and e-mail them every single day until you get a response. I’m not kidding. They are slow. Make sure all your v-mails and e-mails are polite, but stern saying you disagree with your assessment with proof.

* After they respond, you must specifically ask how they came up with their assessment value. Ask them to provide comparables. Also, ask them what you need to do to make your case. There will undoubtedly be appeal forms to fill out. Fill them out and make copies for yourself (important as they like to tell people they never got it 2 months later, hoping you’ll give up and be too late!)

* Like any good negotiator, you must highlight the lowest comps and negotiate accordingly. Let’s say your house is worth $1 million bucks. Go in with horrific comparables that look like bomb shelters in terrible locations, such as a house next to a firehouse that may be worth $500,000. Your comparables need to be similar in dimensions and as close to your home as possible. Set your anchor lowThe more comps you can provide, the better. The assessor doesn’t usually have time to verify the comps physically, and just uses online comparisons.

* Make sure you courteously follow up every month until you get confirmation of receipt over e-mail and phone. One year after reaching out in February, I failed to follow up with more comps until July (big mistake). By then, the assessor had moved to valuing a different district, and another person was recommended to me. Good thing the new person had the forms, and  decided to e-mail and call me back. Otherwise, I would have wasted a lot of time. Don’t forget to back up all your data!

* Continue to file a property value appeal every year. The lady at the assessors office is always hoping homeowners continue to stay naive and don’t file appeals. Once you get your fall property tax bill, it is TOO LATE to file an appeal for the current year. San Francisco property tax appeals are allowed between July 2 and Sept 15 every year. Do not miss the window. Eventually, you will have your hearing and justice will be had.

* Take to social media. After hitting a roadblock, I was able to send a tweet to @PhilTing (SF Property Assessor Head) who responded to my inquiry within 12 hours. He sent me the name and person to contact to expedite my case and it worked. Using Twitter to help your cause can’t hurt, especially if you have a relatively large presence.

THE ASSESSORS OFFICE IS WILLING TO NEGOTIATE

For three years in a row, I’ve managed to prevent my property taxes from going up. I took action and it paid off to the magnitude of roughly $3,000 a year in property tax savings. I finally hit a wall for the 2012-2013 tax year due to a rising market and the incredible logistical roadblocks they’ve placed to appeal.

Just as hope was growing dim, an angel gave me a ring. It was one of Phil Ting’s henchmen who decided after reading my appeal online, seeing my Tweet, and going through my case over e-mail that he was willing to negotiate. After making my case over the phone twice, I managed to get the assessor’s office to split the difference and raise my assessed value higher by “only” $150,000 from $270,000 originally. Paying $1,800 more in property taxes is better than paying $3,000 more.

If you are a homeowner who has been wronged by your city’s assessors office, do not give up! Realize the government is expecting you to roll over and die. Real estate is still my favorite asset class. However, in order to build long term wealth, you must do your homework and fight the powers who are trying to prevent you from achieving financial freedom.

RECOMMENDATIONS FOR HOMEOWNERS

* Check Your Credit Score: Take a moment to check your free credit score through GoFreeCredit.com, a company I trust. 30% of credit reports have errors, which could put a serious hamper on your refinancing or new loan borrowing abilities. I had a $8 late payment I didn’t even know I owed crush my score by 100 points come up during my last refinance! If you don’t want the credit monitoring service, simply cancel before the grace period is up.

* Get the best home insurance possible. In order for your property to grow in value you must protect your property from damage. Fires, floods, leaks, theft, and other accidents happen all the time. If you have cut-rate insurance, you could very well pay way more than you should. I highly recommend checking with USInsurance.com online to find the best home insurance rates. They have a huge network of providers that will compete against each other to provide the most tailored home insurance coverage possible that is affordable. Mobile home insurance, renters insurance, condo insurance, and homeowners insurance are just a few of the options based on the type of home in which you reside. Leverage the internet to save money and protect your largest asset.

Best,

Sam

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. says

    Ugh. We have wen’t round and round with our assessor for years. They were charging us at a rate of over $25,000 more than we paid for the house…immediately after we bought it. This year, there was finally a correction, thank goodness.

  2. says

    I’ve actually never filed an appeal because for the 10 years or so that I’ve owned property, the valuation has always been within a reasonable amount of what it would actually market for. There was one year I thought the city would raise the value when I knew the value had started to decline, but they actually lowered the value.

    It helps that in Michigan, there is a cap of either 5% or the rate of inflation, and even if they assess your value by a percentage higher, they can only increase based on the lower of the two items above. So, even if they deem that the value goes from $200,000 to $250,000 in a year, the maximum they’ll be able to collect on is $210,000, usually lower if inflation is lower. Once the property is sold, the cap is removed. Most of the ‘difference’ was lost during the recent crash, but for many years, it worked out well for a lot of people.

    • says

      Sounds a lot like California. Our taxes are based on the purchase price (Prop 13). But the thing is, even if an atomic bomb hits our great state, the assessors office will raise our property taxes by a certain index usually tied to inflation ~1.5%-2% every year, without question.

      In my case, they reset me back to original value and then tacked on another 1.8%. Devastating.

      • says

        We have a 3% cap since the 90s(?). The assessed value are usually below the real price because the 3% cap couldn’t keep up with the property appreciation. That’s why we still see 3% increase every year.
        I appealed a couple of years ago and was rejected, but the following year our tax went down a bunch. Not really sure why, but I’m not going to complain at this point.

  3. says

    Are you sure it’s the assessor’s office you’re supposed to be calling? Here there are two distinct offices – the property appraisal office that determines the taxable value of your house, and the assessor’s office that determines the millage rates that will be applied to everyone and collects the taxes. They are completely independent offices, so calling the assessor would do you no good when you want to challenge your taxable valuation.
    We have example spreadsheets that we used for our Value Adjustment Board Hearing (pseudo-court for challenging property appraisals) in this post if anyone is curious how they might set it up for a winning challenge. http://www.plantingourpennies.com/2013/01/16/how-we-fought-our-real-estate-tax-appraisal-and-won-part-1/

  4. says

    Even though I don’t own a house, this still might help me in the future when I do own my own house! I never knew that property taxes could be that high (I’m from the Midwest so it might be slightly lower here).

  5. says

    Sam,

    I love your real estate posts. Some of the stuff here is unbelievable. 5 months to acknowledge receipt of your request? Basically this seems like a war of attrition between you and the city. Whoever gives up first loses. And the city has a distinct advantage since no one can be more apathetic than public service workers.

    • says

      EXACTLY. A war of attrition is exactly what this is. It’s the same reason why the MAJORITY of FREE loan modifications that the big banks like Bank of America have been sending out since the US Justice Lawsuit last year have remained unopened b/c folks feel they have NO HOPE in ever winning or gaining benefits.

      Property assessors offices around the nation just hope folks don’t file appeals so they can get away with raising taxes no matter what housing market is doing. It’s particularly scary for those who live in mismanaged budget deficit states such as Illinois, New Jersey, and California.

  6. Winston says

    The property tax valuation on my home stayed the same during the downturn, and I didn’t fight to reduce it. Why not? Because a large portion of it goes to fund our school district (where my son goes to school). As the son of a retired teacher, I understand what a huge impact funding has on the quality of education children get. That is why I will NEVER appeal a property tax hike. I don’t mind if all of my neighbors around me are paying less than me because they appealed their property tax valuation. I will willingly pay more school taxes if asked (realizing they are only a portion of the total tax bill).

    Now, I know that plenty of folks cry and moan because they don’t have kids and don’t feel that they should pay school taxes in the first place (or at least shouldn’t pay any more than they already do). What these people don’t realize (or don’t want to admit) is that our country as a whole benefits from a better educated society. A better-funded local school district actually benefits them, whether they see it or not.

    Oh darn, there’s my socialism showing again.

    • says

      Comrade, I would be fine too if I had kids in public schools.

      Your situation and my situation is different though. Doing the downturn, my assessed value kept on going UP by 1.5-2%, not flat or down. I don’t think you would be OK with your neighbors or folks in neighboring states pay less while you pay more.

      • Winston says

        As I said, everyone benefits from more money in the public school system — not just people with children. Eventually children grow up and become contributing members of society. The better their education, the better their chances of making a positive contribution rather than a negative or neutral one.

        I’m fairly sure that my neighbors were paying less in property taxes during the downturn, because they told me they were appealing their values and getting them adjusted downward. I refused to do that. My assessed value remained flat. I WAS and am still okay with paying more.

        That being said, I agree that our situations are different. I only pay about $4k in property taxes per year on our $160k suburban home, while your taxes (I’m sure) are many times that amount given your locale and the expense associated with it. Plus, you have additional properties, etc.

        • says

          I understand the argument of children growing up to be contributing members of society as a benefit for everyone. Although, how can we be so sure everyone will be a boost rather than a drag? I don’t think we can convincingly argue either way, which is why it’s justified to take this argument out completely and focus on the dollars at hand.

          It’s not society and children. It’s money going from citizen’s pockets to politicians who promise one thing and do another. How else do you explain such HUGE state deficits and problems with our schools?

          Also, I’d love to get your thoughts on whether you are OK if I was able to vote to raise your taxes while I didn’t have to pay more myself. Thanks.

        • JayCeezy says

          @Winston:*Eventually children grow up and become contributing members of society* Errmmmm…not really, especially with the broken public school systems. The highest expenditures per-pupil are in D.C. and St. Louis, which also has the highest ignorance-per-pupil.

          re: Prop 13 – in CA, this caps property tax increases at 2% per year, maximum. Most counties (LA, Ventura, etc.) unilaterally decreased the basis during the downturn(s). The real problem for schools in CA is Prop 98, which guarantees that 43% of the State budget be spent on K-12 public schools; this is true even in the years revenue increased 7% like the late ’90s. The State Education Dept. had to spend the money (they can’t carry over surpluses into future years), so they hired a bunch of administration, and mandated that K-3 have a 1/20 teacher/student ratio. When the go-go internet boomed cratered, the taxpayers were stuck with a bunch of uncredentialed teachers, school breakfast/lunch/dinner programs (90% of LAUSD students are on free lunch), etc. Then, take into account the Bond programs (Bond BB for K-12 in LAUSD was $3.2 billion to buy land and build new schools, when the student population is actually decreasing). Add in the Lotto (“our schools win, too!”) where 1/3 of Lottery revenue is earmarked for K-12 public education. Don’t forget 9% of the State budget that goes to higher education (UC, Cal State where 2/3 of the incoming freshmen need remedial English and Math courses).

          Bottom line, money isn’t the problem, and more taxes won’t fix a broken school system.

        • says

          @JayCeezy: Our own governor (Chris Christie), and our state legislators passed a 2% property tax cap law. There were plenty of localities that began using loopholes to increase property taxes before the law went into effect, and even after.
          With that said, my own locality isn’t trying to go past that allowed limit, and in fact have kept it below the cap since the law was put into place.

      • Winston says

        @Sam — On the surface, it doesn’t seem fair for renters to be able to vote to raise taxes on property owners; however, it will still come around to affect them when the property owners raise rent due to higher property taxes. Are you not recapturing that additional cost by raising the rent you charge for your properties? Or does SF have some sort of rent control rule? I’m not really sure of how that sort of system works, since we don’t have that here in Houston.

        • says

          Many large cities like SF and Manhattan have rent control rules. Some onerous, some more generous like 10% max increase with 30 day notice and up to 60% increase with 60 day notice.

          Most large resets/jumps occur after a tenant moves out. Some tenants never move out so one has to be vigilant.

          Bottom line, there is asymmetric power.

  7. Jenny @ Frugal Guru Guide says

    WOW! I got my property taxes lowered in my last house after my community built another water tank just over my back yard. It wasn’t anything like that, though.

    Winston is…naive? absurd? both? There is very little correlation to the amount of funding per school child and the quality of the education they receive. The glut in funding over the past 20 years as homeowners have been browbeaten to “do it for the CHILDREN” has gone to paying for an enormous ballooning administration, which has grown SIX times faster than enrollment.

    Where I grew up, per-pupil spending is fairly low. The schools are new or recently remodeled, and for the demographics, the area has great test scores. (One of the 90%+ below poverty line elementaries is a Blue Ribbon School, and they’re repeating the model on the other school in the district with similar demographics.)

    Around here, they spend 50% more per pupil, and the schools were all build in the 50s, 60s, and 70s and NEVER REMODELED. Some of them smell like mold when you walk in the door from the ceiling leaks. Almost none are ADA compliant. And every few years, the district pushes for a more money to “help.” The schools see almost none of it. The money stays firmly at the district level, feeding an ever growing number of administrators.

    No. I’m not happy with the school district, and I’m not going to happily pay whatever they want to pull out of my property because it’s “for the children.” It’s not for the children. It’s for the administration, and the children go hang.

    • says

      It is funny how propaganda always use “the children” as a way to convince all voters to raise homeowner’s property taxes. Well shoot, of course when 65-70% of the population doesn’t have to pay for property tax increases in San Francisco it’s fine.

      It’s the same thing with Prop 30 passing, and Prop 38 not passing. Prop 38 raises income taxes on everyone, so that EVERYONE pitches in to help our children by the tune of $10 billion a year. SHOT DOWN. Instead, Prop 30 passes where only those who make more than $250K a year pay higher income taxes and raises $4 billion LESS a year.

      Why can’t we ALL pitch in to help our children? Why do we have the power to raise another person’s taxes without having to pay more ourselves?

      • says

        Right on, Sam. If voters were really as altruistic as they may claim, prop 38 would have had no problem passing. Instead, it always sounds better to have someone else pick up the tab. Imagine if you could “vote” who paid at a bar? You could easily get enough votes to have someone else pick up the tab there too.

        • says

          It continues to perplex me why everybody doesn’t pitch in to raise 70% more money a year for the children’s if that’s what they want.

          I swear I would never have to pay a bar tab again if I had Chuck Liedel, Patrick Willis, The Undertaker, and The Hulk as part of my crew.

  8. Terry says

    While the apparent redistribution from homeowners to renters is egregious and insidious, property tax redistribution usually runs in the other direction.

    In many states (about half), rental property is taxed at higher rates than owner-occupied homes; in Michigan the school property tax rate on rental property is four times the rate on owner-occupied primary residences leading approximately to an extra $1,500 annual property tax on a typical rental house. The 5% cap on increases in “taxable value” – distinct from and usually well below “assessed value” – combined with shorter average holding periods for rental property, made taxable value on rental property 30% higher than on equivalent owner-occupied property by the end of the 1990s. (As is common with similar caps, taxable value is adjusted to current market value – marked to market? – upon sale; the shorter average holding period of rental property causes it to be adjusted to market value more frequently than owner-occupied homes.)

    I know several Michigan landlords who believe their assessors are using assessments to effect a modest redistribution from landlords to homeowners but I’ve never seen any actual study making that claim.

    And Sam here has proposed a renters’ tax on the ground that renters don’t pay property taxes – if that’s the case, why not raise property tax rates on rental property an additional four times over what homeowners pay?

    • says

      Terry, just so I understand, are you talking about the redistribution of wealth from landlords to primary homeowners with no rental properties? Eg landlords are subsidizing homeowners with one home they live in?

      I’ve never heard of rental property taxes being 5X higher than primary property taxes. Or are you saying the redistribution is to landlords from renters because landlords will just pass on the tax cost to their tenants?

  9. says

    I filed for the first time this year, fingers crossed. We have an online application that makes it a bit easier. Reminds me…it’s time to go check the status…

  10. says

    Well, technically, they do pay the taxes – it’s passed onto them in greater rent. However, don’t try to teach all the renters in San Francisco about Economics, they won’t like that.

    You’re making me happy I bought a fixer in 2011. I don’t like Prop 13 in aggregate, but it does help me here – assuming I don’t add a monster addition, I’m looking at 2% returns for a while now (the assessment is already much higher than 2% increases).

    Good luck with the city, comrade.

  11. Steve H says

    Appealing for a lower rate works for more than property taxes. In addition to lower property taxes, I have negotiated lower prices (or averted price increases) on the following:
    Car insurance- I simply called during the renewal period and told my insurer that a competing insurance company had offered me a lower price with more coverage. I asked for a review. When asked what competing rate was, i answered “Ive been with you a long time, just put your best foot forward” My insurer came back with a figure $50 lower.
    Home owners insurance- did the same thing and had it lowered.
    Cable TV/Internet bundle- got tired of the bi-annual rate increase. I called customer service and told them I felt it was no long a good value. My rate went from $80 eight years ago to over $100 today with no increase in service or quality. I could get Dish for less, i said. They put me in touch with their “retention department” who let me keep my rate for another year. When that year was up, I did it again and was granted the same rate. I’ll do it again.
    Lawn Service- lowered it to half during the winter months when they only have to cut the grass every other week.
    You’ll find you can keep more of your money by simply asking.

  12. Jason says

    I think at least part of the problem is because of where you live. I’m just over the bridge in the East Bay and lowering my assessed value happened within 3 weeks of me sending in the paperwork, no questions asked. It lowered my assessed value by over 10%. Between this and the no-cost refi, we’re saving a lot each month. Most people in my city own and are middle-to-lower income, so I think there’s a lot of incentive to keep the costs down.

    Maybe you should consider moving? You’d save a lot of money… :) I guess that’s why retirees usually move. I’m considering it when I’m done.

    • says

      Most definitely considering. I’ve got a 2-3 year plan to move to a lower income tax state and just keep a pied de terre in San Francisco for when I want to visit. The planning will be fun and I’m excited!

      • Jason says

        That sounds great. I’ve gotta hand it to you for sticking it out in SF for so long. To me, the “shine” wore off after about living there for 5 years and I was ready to go. So many irritations. And it seemed every third person I met was “on the dole” in some way or another. Many even admitted to gaming the system. I’ve always considered myself “left-leaning”, but that kind of garbage really got to me.

        Moving would be an adventure, but we are not ready to actually do it yet. And, there’s the question of where to move to. I did look at some numbers for a nice lakefront resort where my folks currently live. The cost turned out to be a wash, especially with all of the cost saving things we’ve done. And, since it’s a strongly retirement-oriented place, the average age there is late-60s, so we’d be hard-pressed to find a peer group. Still, I do predict some sort of move after FIRE. I think Vegas would be my first choice, but wifey is against desert living.

        • says

          Take a look at the Nevada side of Lake Tahoe. Some good property deals to be had and of course no state income taxes. I wouldn’t mind just renting a place there for residency as well to avoid property taxes.

  13. says

    I have been lucky so far, that my assessment has been right. In Los Angeles, they went around Prop. 13 by putting a measure to add to your utility bill a tax to fund trash and police. Now my utility bill has an additional $45 in taxes every other month for trash and police.

    BTW, the woman in the assessor’s office is wrong regarding renters and property taxes. As a landlord, I always passed on higher costs to my tenants. I think if the tenants realized that higher property taxes adds to their rent costs, they would feel differently.

      • says

        It is what we call business as usual. As a landlord, you try to recover your expenses like taxes. In fact, new landlords generally will raise rents to re-coop the price they paid and the higher taxes associated with the sale. You see this same thing when companies buy or merge companies. Airlines are raising prices because they can with less competition. At least with rents there is a limit, the market place.

  14. says

    not all markets are as ruthless as SFO. several cities/counties in MI are automatically lowering assessed/equalized/taxable values much lower than market worth (based on comps and zillow). makes things a lot easier for those living there.

    I do agree with the process however as I’ve done the same in two other states. it takes time, but it works.

    • says

      Michigan seems more homeowner friendly. Although no Michigan tax collector can say with a straight face their economy is doing well when the auto industry almost went BK.

      It’s easier for SF to jack up rates given we’re in this bubble. But not everybody participates in a bubble, but SF is carte Blanche raise em up!

  15. says

    Assessors are worse than the country lords of old (actually, they’re pretty similar from a tax collection perspective). I recently had my house appraised for a refinance and the appraiser told me that the appraisals are typically coming in around 10-20% below the ASSESSED Tax rate. Seriously? WTH. I’ve tried to fight it in the past but have never had much luck with it.

        • Steve says

          assuming your appraisal is done between the month of Oct to March otherwise it will not be considered by the assessors office. I tried to fight prop tax increase with the appraisal from a refinance and was told to have a nice day without any apology as the office only considers sold properties or appraisals done between Oct 1 and March 31 every year. At least that is how it is in california.

  16. Catie says

    We have been in our current home since 1988. Purchased off the repo market, we slowly fixed it up and made it ours. I have only fought the assessor’s office once. Our local gov’t set up a provision years ago that your assessed value can’t increase by more than 3% per year unless there were permitted improvements done. Only once did they send out the new assessment going up over 8%. Surprising to me, it took a phone call. They claimed there was a ‘computer error’ and immediately set out a corrected assessment. Even after all this time we have continuously had our assessed value at less than the market value listed on Zillow. After reading many of the other post I am thankful to be living in North Florida.

    Since that one occurrence, the laws have changed. I expect the assessment to catch up with the true value within the next couple of years and then the games could begin.

  17. John says

    Sam, based on your posts I am going to be soon buying a house in the East bay.

    Are you saying that the property tax increases by 2% annually (which is the max cap based on Prop 13)?
    Also for a new home purchase is the 1st year property based on the sale price or the appraised price (given that you need to overbid to get the needed house)?

  18. JayCeezy says

    FS, that is the price you pay for living in a *Superstar* city!:-) When your values are going up, up, up, the Assessor is going to take notice. Didn’t you recently list your house for $100,000 above market value? That shows up on Zillow; and no matter what the Assessor says, they do use realtor.com and Zillow.com for information, if only for the pictures and Googlemapping.

    Anyway, most of the State of CA is still WAY below the highs of the mid-2000s values, and LA and Ventura Counties unilaterally reduced their values 20-30%. The County I live in, I walked in to the Assessor’s office, made a verbal request noted in the computer by the Clerk, and the reduction was granted (12.5% reduction) just this November. Things are still depressed (except in *Superstar cities*!). But I admire the ‘spirit of the warrior’, and if you can get your tax reduced that is fantastic.

    I did have a brutal experience in 1993 appealing my Redondo Beach home’s value (there were foreclosures everywhere, not unlike more recent times). I had to take a day off work, drive 30 miles, wait half-a-day while the Appeals panel heard each case. I made my case noting the Foreclosures; the panel chair stated “we con’t count foreclosures”. WTF? He said, “we can grant you $5,000 reduction ($51 off my bill), or you can take another day off work and come down and appeal at the next level.” He then turned his head away, cupped his ear, and mockingly waited for me to decide. Ugh! I pu$$ied out, and took the reduction, unwilling to take another day off work.

    Bottom line, the appeals process is good if you are unemployed, retired, or work nights. The Assessors get paid by the hour, and treat the property owners like they are also getting paid by the hour to wait, research, argue, and settle. The “two years” thing is interesting too; people die, divorce, lose jobs, move closer to family, etc. Sometimes the property owner is overtaken by events more pressing and has to sell; then, the Assessor’s protest becomes moot.

    Just curious, but would you say your house has a market value above the Assessed value? The initial Assessment is based on the purchase price, and with 20%/annual SF homeprice increases, you must be ahead of the game. How about your rental properties? Are they taxed at market value?

    • says

      Good point on listing. Yes, they used my higher listing as one excuse to raise. All I had to say was that I didn’t sell and the price was just a pie in the sky number!

      That’s a brutal Ventura County story. Thank goodness for the Internet now. War of attrition. A 2 year wait to win an appeal is redonkukous. No wonder so many folks don’t bother or just give up!

      The assessed value is always going to be higher than my perceived value as long as I own, because I think my properties are worth zero. Only when I plan to sell do I look for a market clearing price.

      • JayCeezy says

        FS: “assessed value is always going to be higher than my perceived value”

        That is really great, a ‘truth bullet’. I wish I had your site 20 years ago; the idea of “fairness” is something I wasted decades of life wondering on, and thinking it mattered. But it doesn’t. The bell never rings in the ‘school of life’.:-)

        btw, another ‘tip’ from your book “How To Engineer Your Layoff” also applies in Property Tax Appeals. Assessors and those who work there are people, too. A small consideration I showed to an Assessor in Ventura County, by making him look good in front of his boss (I mentioned that he had been professional and responsive when others had not) and it turned in to some reciprocity in another occasion (he permanently knocked $39K off my basis, or $410/yr). Also, the County in which I reside now, when I spoke with the Clerk (really just taking requests for angry, abusive idiots), I told her I really appreciated how well she handled the previous customer (who was ridiculously dramatic). I also was humble, told her I “blew it, and overpaid” for my house, which is true; she told me “that happens sometimes.” It was a small moment of mutual empathy; I’m sure that is what made my 12.5% reduction (more than I asked for) go through with nothing more than a verbal request. They are just trying to get through their day, and are people, too; they respond to respect and deference, just like I do.

      • JayCeezy says

        One more thing, on the Redondo Beach (LA County) story…I followed all the written directions for the process, including sending in any documentation for my lower value. Having refinanced, I had an Appraisal which cost me $300 and showed the significantly lower comparables and value. The Assessor did not respond to my calls, so I had to show up at the cattle-call hearing. The Assessor used these cattle-calls (everybody came in and sat down, and spoke from their seat) as a tool to embarrass us; we had to argue our case in front of an audience, and he sliced us to ribbons. In my case, when I brought up my documentation which he had a copy of, it turned out the Assessor spent his time discrediting the comparables! I had shown my ‘hand’ first, as it were (according to the written Appeal instructions) and he used it against me! (there were foreclosures in the comparables). Ugh! Anyway, even though a professional appraiser and lender may take the appraised value as “fair”, as your posts aptly notes “fairness” is not what the Assessor is seeking.

  19. Eric Shun says

    “They [renters] will always vote to raise property taxes since they don’t have to pay for them.” Te he. The landlord simply rolls the prop tax and other expenses into the rent price. The renter is indirectly paying prop tax.

    FS – What do you mean that your assessed value was “reset”?

  20. Jane G. says

    So how does this help you if you want to sell…and get the highest price for your property?
    Will LOWERING taxes affect the price you can command?

    • says

      It doesn’t. Selling and buying is based on market forces. If you drive a 1953 Porsche in immaculate condition and offer it for $1 on eBay, you will get whatever someone is willing to pay for it.

      Property tax administration and rates are based on artificial levels determined by politicians and voters who will happily take all your money if you can.

  21. says

    The property assessors office is just counting on people to forget or give up trying. And a lot of times they win. One employee told my mom “it’s not worth it to apply for a reduction” and my mom foolishly took that woman’s word for it and didn’t apply. I was banging my head on the wall when I found out. It takes hard work to save money but it’s worth it!

    • says

      Agree. Making money and SAVING money takes effort. 70,000 pages of tax code, 1 hour long hold times, and busy lines with 5 transfer options are there for a reason. To make a person GIVE UP.

      Never stop fighting.

  22. says

    If only I had read this article 3 years ago when I owned an investment property that was getting killed on real estate taxes in the city. They are so quick to raise the value of your home but drag their feet when the value decreases. Really makes you wonder where your money is going in relation to your municipality.

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