Values drop, so can taxes

Your home is worth less, but there's a bit of a silver lining: Your property bill may fall.
By: Gayle Pollard-Terry: latimes.com
Home prices are dropping in parts of Southern California and, for owners who bought at the market's peak, that could translate to lower property tax bills.

Because property taxes are based on 1% of the sales price of a home, a dip in the market can shave more than a few dollars off the assessed value of a house and the biannual payment — the second of which must be paid by April 10 to avoid penalties.

Reductions are permitted by Proposition 8 — an amendment to tax-limiting Proposition 13 — that allows county assessors to reduce property taxes when market values fall. To get one, homeowners must be able to show their residence is worth less than its purchase price.

Gregory J. Smith, assessor, recorder and county clerk for San Diego County, offers an example: You bought a house in 2005 for $400,000 and today its price would be $325,000 — a $75,000 reduction. The tax reduction would be 1% or about $750, Smith said. San Diego County is leading the six-county Southern California region in property value declines. The median price of all homes, which includes new and existing single-family residences, town houses and condos, fell by 5.9% from $510,000 to $480,000 from February 2006 to February 2007, according to DataQuick Information Systems, a La Jolla-based research firm. As a result, Smith's office expects an increase this year in the number of requests for lower bills.

So far, Orange County Assessor Webster J. Guillory has seen few requests for reviews this year. "Less than 10," he said. In February, Orange County posted its first year-over-year median price decline in two decades. Despite the drop, 0.4%, from $622,250 to $620,000, the median price remained the highest in Southern California.

Homeowners must pay their full property tax bills when due to avoid penalties, even when requests for lower assessments are pending.

Ventura County posted a year-over-year drop of 3.5%, sending the median from $605,000 to $584,000. Because values are going down, the county's assessor, Dan Goodwin, said he isn't waiting for homeowners to ask for reductions.

"We've already begun identifying … where there is a potential need for a reduction in assessment," Goodwin said.

Homeowners who bought from the second half of 2005 through 2006 "deserve to have their values reviewed," he said, adding, "condos as a general rule are showing more need for this kind of adjustment."

He estimates 20,000 to 25,000 Ventura County homeowners will be informed of reductions when value notices go out in July, without having to apply.

Whether a countywide median zips up or down, when it comes to a property tax bill, the numbers that matter most to any homeowner are the recent sales prices of the similar houses in the area. A downward trend gives homeowners the comps, or comparables, which are available from realty agents and many assessors' websites, that they need to prove a decline that warrants lower taxes.

In Los Angeles County, the median price increased by 7.8% from $490,000 to $528,000 in the same year-over-year time period, according to DataQuick. But a rise in a county median, the amount at which half of all houses cost more and half cost less, can mask a loss of value for an individual house.

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Making your case

As of March 24, 2006, there were 256 filings for reductions, said Jim Hosking, director of assessor's operations in L.A. County. As of the same date in 2007, the office had received 323.

Homeowners who believe they are due a reduction can get a Proposition 8 form online, by mail or from their county assessor's office.

Although those applications are accepted all year in L.A. County, the filing period varies elsewhere. In San Diego County, the request must be made between now and the end of May. In most other counties, the deadline is May 15, with decisions rendered within a month or two.

A homeowner who misses the local deadline or cannot work out a satisfactory agreement with the county assessor's office can file an application with an independent Assessment Appeals Board. The filing period for most counties runs from July 2 through Nov. 30.

In most counties, homeowners make their case before board members. In L.A. County they typically go before hearing officers. It can be a lengthy process.

It can take up to a year from the time the application is received to the hearing, said Kathy Bones, who supervises the processing of applications in L.A. County. Homeowners are asked to bring three examples of "like-for-like" properties — those that are comparable to their own that recently sold for a lower price. A representative from the assessor's office also presents evidence.

If either side disagrees with the decision of the hearing officer, another hearing can be requested before the full board. After the board makes a decision, either side can appeal to Superior Court, although Hosking of the L.A. County office said the assessor rarely proceeds in that manner, and neither do most taxpayers.

For those who do, the court doesn't determine whether the taxes should be cut, he explained, but it can remand the case back to the appeals board for another hearing. Few cases get to that point.

It sounds complicated, but local assessors and their representatives provide a great deal of information on county websites or over the phone. They also indicate that homeowners need not hire a service for assistance with a form or appeal in exchange for a big portion of the tax savings.

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gayle.pollard-terry@latimes.com



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More info

Los Angeles County

(213) 974-3211, assessor.lacounty.gov, http://www.lacountypropertytax.com

San Diego County

(858) 505-6262, http://www.sdarcc.com

Orange County

(714) 834-2941, http://www.ocgov.com/assessor , http://www.ttc.ocgov.com

Ventura County

(805) 654-2181,

assessor.countyofventura.org, http://www.ventura.org/taxcollector

San Bernardino County

(909) 387-8308, http://www.mytaxcollector.com , http://www.co.san-bernardino.ca.us/assessor/

Riverside County

(951) 955-6200, riverside.ca.ezgov.com/, http://www.treasurer-tax.co.riverside.ca.us/