Proposition 13
Under Proposition 13, real property is reappraised only when a
change-in-ownership occurs, or when new construction takes place. Generally, a
change in ownership is a sale or transfer of property, while new construction is
any improvement to property which is not considered normal maintenance. Except
for these two instances, property assessments cannot be increased by more than
2% annually.
Proposition 8 (decline in value)
Due to recent housing market conditions within Placer County, the Assessor ‘s
office has begun to review the value of properties purchased since January,
2004, in an effort to determine if value reductions are warranted under
Proposition 8 (Prop. 8).
EXAMPLES:
Valid Claim for Reduction in Value:
The graph below is used to illustrate Prop. 8 and 13 values for a house that was originally purchased for $400,000.|
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Note: This chart is for illustration and does not to forecast future property values. |
The assessed value of the house will be enrolled at the lower of the two: Prop.
13 value or market value (Prop. 8) as of lien date (January 1) for each year.
Prop. 13 limits an increase in assessed value to a maximum of 2% per year;
exceptions to this rule would include new construction and change of ownership.
Prop. 8 allows for a reduction to the enrolled value if and when the market
value drops below the Prop. 13 value.
Year 1 - $400,000 market value
enrolled as assessed value.
Year 2 - Even though the market
value of the house has dramatically increased within the first year, $408,000
assessed value is enrolled under Prop. 13.
Year 3-6 - $365,000, $355,000,
$375,000, and $420,000 are respectively enrolled as the assessed value under
Prop. 8.
Year 7 – The factored Prop. 13
value is reinstated as the assessed value. Though the market value is at
$500,000, the Assessor may only enroll the original value ($400,000) plus 2% for
every year after the base year was established; roughly $450,000.
Invalid Claim for Reduction in Value:
Unlike the example above, the market value in the example below never drops below the assessed value under Prop. 13; therefore, no adjustment is warranted.
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Frequently Asked Questions (FAQs)
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What does Proposition 8 say? |
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Revenue and Taxation Code Section 51 requires the assessor to enroll
the lower of either the property's Factored-Base-Year Value
(established under Proposition 13) or its market value as of the
lien date (January 1). |
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Do properties other than single-family residences qualify? |
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Yes, all real property qualifies. |
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How can the assessed value of my property be changed after you
reduced it? |
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The assessor is required to review the temporary Prop 8 value each lien date following the initial reduction. The Prop 8 value can be further reduced or increased depending on the property's market value as of the lien date. Just as there is no limit on the amount of reduction, there is no limit to the amount being restored up to the Factored-Base-Year Value. |
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If I'm granted a reduction for the current year will I hrequest another review next year? |
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No, once you have been granted a reduction pursuant to Prop 8 your
next year's value will automatically be reviewed. A Notification of
Assessed Value will be sent to you in July, which will indicate the
assessors
findings. |
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What will happen to my assessment if values start to rise? |
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Your taxable value reduction to market value is temporary and the
assessor is required to review the market value of the property each
lien date after the reduction, until such time as the
Factored-Base-Year Value is less than or equal to the market value. |