California Property Tax Appeal: How to Lower Property Taxes in CaliforniaProperty Taxes
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Whether you own a home, apartment building, hotel, commercial property, vacant land, or any other real asset, you know that property taxes can add significant costs to your bottom line every year, and this is especially true in California.
With current California property tax sitting roughly at 1%, California property owners are feeling the tax burden.
The average California homeowner is paying roughly $4,000 per year in property taxes alone.
And if you own a larger property such as a multifamily or commercial building, you’re probably paying way more than that.
The good news is that no matter how large or small your property, it is possible to lower your California property taxes if you know what you’re doing.
California Property Tax Appeal
While California’s property tax rate isn’t necessarily higher than the rest of the country, it’s the much higher than average property values that cause issues with property owners all across California.
If you feel that you’re paying too much property tax, you’re not alone.
There are a few reasons why you could potentially lower your property tax burden, and we’ll show you how to do it.
Here’s how to lower your property taxes in California.
The County Assessor Makes Mistakes
One reason you would want to try to lower your tax burden is due to inaccurate records.
This typically means that the local government, usually the County Assessor’s Office, has received incorrect information about your home.
Mistakes in Size, Value, and Location
That information can be incorrect information regarding the size, value, and even location of your property, which can dramatically impact the property taxes that you pay.
Fortunately, fixing the problem of inaccurate records is a fairly straightforward process.
Unfortunately, without someone to help you, it can also be a lengthy process if you’re not sure what you’re doing.
Increase in Assessed Value Cannot Exceed 2%
When your property taxes are assessed, you’ll receive full records of how your taxes were assessed based on the value of your property.
Under California law, property values cannot be assessed at more than 2% of what the value was the prior year, which helps control property tax rates for homeowners.
However, when property information is incorrect when it is sent to the County Assessor’s office, your tax burden may be incorrect, meaning you could be paying more property tax than you owe.
You Should Appeal As Soon as You Find a Mistake
As soon as you are aware that the information that was sent is inaccurate, you should start the appeal process, which we will detail later in the article.
If you’re unsure of how the appeal process works, what information you need, and how to go about lowering your property taxes, the process can be extremely delayed, or might not even happen at all.
Don’t leave your property taxes up to chance.
When you see an error in official records, we can help expedite the process of lowering your property taxes.
Decline in Property Value (Proposition 8)
Since property taxes are calculated from the overall property value, you should always try to have your property taxes lowered if the value of your property has declined.
Property value declining is the number one reason that California property tax appeals are filed each and every year.
Property value is only assessed when the ownership of the property is transferred, or when a new building is constructed.
Have Your Building Assessed Regularly
If you’ve owned your home or a commercial building for a long time and don’t plan on selling it, you should have the building assessed regularly.
This is especially important if you feel the value of the property has lowered.
Even a decrease of $10,000 can quickly add up in property tax savings, so be sure to have your property assessed regularly.
The Assessment Process
When you file an appeal under the premise that your property’s value has decreased, you’ll need to fill out an assessment form and provide information as to why you believe the value has decreased.
If your appeal is denied, you can then appeal again with the appeals board directly rather than through the County Assessor.
Tax Assessment Appeal
The tax assessment appeal process can certainly be complex and time-consuming, but it doesn’t have to be.
Proposition 13 was a law that was passed in 1978 to help protect homeowners against skyrocketing property taxes.
This is the legislation that put the maximum 2% rule in place that we discussed earlier.
A property’s value can be assessed at a 2% maximum increase annually.
Property Taxes Should Be Manageable
This helps prevent pricing out homeowners from a specific market and keeps property taxes controlled and more manageable.
Every time a property is bought and sold, an assessment needs to happen.
The assessment will help determine the current market value, which is what a reasonable buyer would be willing to pay for the property.
While this often lines up with what the property actually sold for, but it doesn’t always happen that way.
There are times when a property is assessed for much more or less than the sales price, which has a major impact on the property taxes that the new owner will have to pay.
There’s a Lot that Goes Into Valuing a Property
With so much that goes into determining your property’s value, which in turn determines your property tax burden, you need to be aware of how to file an appeal if you feel there is an error.
First, you’ll need to start with the appeal application, also called the Assessment Appeal Application.
There is a small fee that you will need to pay that can vary by county, but if your appeal is successful, the small fee is more than worth it in tax savings.
You’ll then send the appeal form directly to the County Assessor’s Office, typically between June and September of the current assessment year.
As we previously mentioned, the entire appeals process can take quite a bit of time if you’re unfamiliar with how the process works.
Data Is Your Friend
Be prepared to provide data on your property, as well as other properties in the area if you want your appeal to go through.
You need to be ready with sufficient financial data, as well as your own assessment information on your property.
When you start an appeal process, the burden is on you to prove that the original assessment is incorrect, which is much easier said than done.
Without professional help, it can be extremely difficult to win a property value assessment appeal.
California tax codes are complex, with each county having their own specific tax codes and regulations.
No matter where you live in California, it’s important to have a thorough understanding of not only your own county’s tax laws, the surrounding counties as well.
If you were to move or purchase property in a surrounding county, understanding various tax regulations can help you be prepared if you feel your property is being assessed incorrectly.
Proposition 13 set the property tax rate for the entire state of California, meaning you don’t have to worry about county-specific tax rates.
However, the appeals process can vary from county to county, as well as other tax codes and regulations, so it’s important to become familiar with various tax processes.
Los Angeles County
Los Angeles County prefers a direct conversation approach to the appeal process.
That means that if you disagree with the property value assessment, you should simply contact your County Assessor to discuss your concerns directly.
The LA County tax appeal process is very open and welcoming, although you should expect delays in the process.
With so many branches of government seemingly shut off from simple and straightforward communication, this approach is a breath of fresh air.
Board of Appeals
If you are not able to reach an agreement with the County Assessor, you are then able to file a formal appeal with the board of appeals.
If you’re in need of help with a property tax appeal in Los Angeles County, look no further.
San Diego County
The San Diego County Assessor’s Office provides an extremely thorough, step by step process to appeal your property tax assessment, making San Diego property tax reductions less intimidating than what you might find in other areas.
Much like Los Angeles County, San Diego County officials encourage property owners to first contact the County Assessor’s Office to discuss any issues with the assessment.
If there are errors that are found, you may not have to file an appeal, which can save you time and money on application fees.
San Diego County Has a Different Application Period
San Diego County also has a different application period than the “standard” period from June to September.
You’re able to file an official appeal any time between July 2nd and November 30th.
Appeals Are Decided Within Two Years
According to the official regulations set in San Diego County, official tax appeals must be decided within two years of the filing date.
Two years can be a long time to wait for property tax adjustments, so it’s always a good idea to have a dedicated tax professional work on your behalf.
If you own property in Orange County, your base year value is the year in which you acquire the property.
Like many other counties, your property may be assessed if you make any updates or additions to the property that may impact the value.
If you disagree with the assessment, you should always appeal the property tax assessment in Orange County.
These adjusted base values have a 2% annual cap increase, and may or may not happen.
The property will be assessed again if there is any change to the property title.
Orange County adopts the same appeal timeline as San Diego County, allowing property owners from July 2nd to November 30th to file formal appeals.
Riverside County requires a $30 fee with every appeal application, and even with early submission, it can take longer than a year to have your appeal hearing scheduled, making property tax appeals in Riverside some of the most time-consuming.
The timeline in Riverside County is also July 2nd to November 30th, but with the high volume of applications, we recommend getting your appeal in as early as possible.
45-Day Notice of Hearing
You’ll be given a 45-day notice of the hearing and are required to attend the hearing.
Otherwise, your appeal will automatically be denied.
Riverside Has a High Appeal Rate
Riverside County has one of the highest appeal rates in California.
In fact, there is such a high volume of appeals that are submitted to the County Assessor’s Office that the process has been streamlined online.
There is no mention of calling or talking to someone at the County Assessor’s Office prior to starting the official appeal process, so don’t expect to walk in and get the issue resolved the same day.
Be prepared to spend time gathering relevant data and waiting for your appeal to process.
San Bernardino County
There are multiple types of appeals that are available in each county, but San Bernardino County does a nice job of breaking down those various appeals right on the County Assessor’s website.
A property tax appeal in San Bernardino County is very similar to what you’d experience elsewhere in California.
Long Waiting Period
Much like the other counties on this list, there can be a long waiting period for a hearing to be scheduled.
If you’re not able to resolve the issue directly with the County Assessor, you can file a formal appeal and will receive a notice of a hearing date within 12 months of the appeal being filed.
You’ll then get a 65-day notice before the hearing date, and the entire process will take 24 months or less from the date of filing.
If a refund is due, you’ll have a check in the mail within three business days after the successful conclusion of the hearing.
Why Lower Property Taxes?
With so many assessments happening every year in California, it’s not uncommon for assessments to be inaccurate.
If you notice errors or your property value has declined, you may be able to significantly lower your property tax burden.
Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.