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Commercial Prop 13

From the U-T:

SACRAMENTO, Calif. — Democratic lawmakers are determined to close tax loopholes they say cost state and local governments hundreds of millions of dollars each year, as they search for ways to trim California’s enormous deficit.

A report by the union-funded California Tax Reform Association found that the share of property tax paid on residential property has increased since two-thirds of voters approved California’s landmark Proposition 13 tax law in 1978, while the share paid on commercial property has decreased.

In Contra Costa County, for example, taxes on residential properties now make up 73 percent of property taxes collected, up from 48 percent in 1978.

Democrats and unions say many corporations are using loopholes when they buy and sell properties to avoid having them reassessed and their property taxes go up.

“The system is an incredible mess,” said the association’s executive director, Lenny Goldberg. “People are constantly changing their share of ownerships, figuring out ways to avoid reassessment.”

Republicans strongly oppose efforts to tinker with the system. They see such moves as an effort to undermine Proposition 13, the initiative that capped property tax increases and remains popular with voters.

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Property Tax Re-Assessment

From the SD County Assessor – I am happy to provide comps:

The County Assessor’s Office wishes to notify property owners that tax relief is available if their property’s market value has fallen below its assessed value. Your property’s assessed value is shown in the upper right hand corner of your current tax bill. For all practical purposes, this only affects those property owners who purchased their property at the height of the current real estate market.

Under State law, a temporary reduction in assessed value can be made when the market value, as of January 1, 2010, falls below the assessed value.  

Once reduced, the Assessor’s Office must then annually review the value of the property until the Proposition 13 value is fully restored (adjusted with the annual CPI, not to exceed 2%). Consequently, a new request for review is not required if your property currently has a temporary reduction under this provision.

Property owners who believe their property’s market value has fallen below its assessed value should file an Application for Review of Assessment with the Assessor’s Office as soon as possible but no later than May 14, 2010.  They should provide their opinion of value and supporting documentation, such as comparable sales, current listings, or a recent appraisal indicating the value as of January 1, 2010.  Ideally, comparable sales should have occured between 10/1/09 and 3/31/10.

(more…)

Proposition 60

 from the U-T:

prop 60Greg and Sandra Seyler thought they were doing everything right when they bought a home for retirement in Alpine last year and then sold their Santee home earlier this year.

Greg, 54, who earns a living washing windows, and Sandra, 56, a dog trainer, wanted to take advantage of Proposition 60, a 1986 state law that permits seniors, and later the disabled, to keep their low tax bills if they sell one property and buy another for a lower amount.

But the county assessor’s office denied their request because its appraisers believe the Seylers sold their house for more than it was really worth. The county believes the couple owe more than $5,500 in property taxes rather than the $2,000 they had planned on.

If the county prevails, Seyler predicts, all seniors with the idea of taking advantage of Proposition 60 should think three times before doing so.

“I’d never recommend this to anybody,” he said.

(more…)

Prop Tax Revenues

del mar

from sddt.com

There are five cities in San Diego County that experienced an increase in property tax revenues in the fiscal year ending in June 2009 despite the county’s assessed value being down 2.3 percent overall.

Del Mar, Coronado, Solana Beach, Poway and Encinitas are the only five cities in the county that have experienced growth, according to County Assessor David Butler.  “They’re the ones you’d expect — coastal cities and other well-off areas,” he said.

Del Mar and Coronado had the most growth at 5.75 percent and 5.11 percent, respectively.  Solana Beach, Poway and Encinitas all grew by less than 2 percent each.

Unlike much of the county, the five cities have had relatively stable home values and few foreclosures.

Additionally, their city governments have not had the same sort of financial issues seen in other cities within the county.

As the city of San Diego faces a deficit of $179 million, some of these cities have been able to produce a surplus, even if it is small.

In Poway, the 2008-09 budget ended with a $320,000 surplus, which Poway City Manager Rod Gould said was due to making cuts with “a scalpel rather than a meat cleaver.”

He said citizens would not likely notice most of the cost-saving strategies the city employed, though they may see slightly lower park maintenance or have to wait a little longer at the permit counter.

“The reason we’re doing a little better than most (other cities in the county) is because we saw this coming three years ago,” he said.

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Our friend Kingside contributes this data received while attending a recent Butler speech:

# of NODs/# of NOTSs/Prop Tax Reviews/Total County Assessed Values/% chg/Total Supplemental Taxes

Year NODs TDeeds Tax Reviews Asd Value* Inc/Dcr Sppl Tax
1992 12,059 3,827 unk 140 B 4.3%
41.9 M
1993 12,521 5,110 unk 142.7 1.9%
25.8 M
1994 10,754 5,338 40,300 144.1 1.0%
18.4 M
1995 11,251 5,267 95,900 145.3 0.8%
15.3 M
1996 12,037 5,994 148,800 146.1 0.6%
22.0 M
1997 10,085 5,136 195,300 150.3 2.9%
28.8 M
**** **** **** **** **** **** ****
2005 5,080 559 <100 319.4 13.3%
298.8 M
2006 10,294 2,065 <100 319.4 13.3%
307.1 M
2007 22,194 8,417 11,500 391.4 9.36%
243.6 M
2008 34,069 19,577 88,000 409.4 4.59%
191.1 M
1-8/09 28,149 10,294 216,000 399.9 -2.3%
62.8 M

* in billions

The changes in assessed values (shown in supplemental taxes) must be particularly volatile these days. Properties sold at peak are having their assessed values reduced 20% to 50%, while at the same time the sales of long-time-owned properties are causing increases in similar amounts.

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