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Real Property Assessments

 

One of the primary responsibilities of the Assessor-Recorder Office is the assessment of real property - that is determining the proper taxable value for all properties subject to taxation.

The assessor must annually assess all taxable property in the county to the person, business, or legal entity owning, claiming, possessing, or controlling the property on January 1st.

California Assessment Laws (Prop 13)

On June 6, 1978, California voters approved Proposition 13, an amendment to the California’s Constitution that rolled back most local real property assessments to 1975 market value levels and limited the property tax rate to 1 percent plus the rate necessary to fund local voter-approved bonded indebtedness.

In short, the assessment year 1975-76 serves as the original base year value for real property assessments. Proposition 13 also limits annual increases in the base year value of real property to no more than 2 percent, except when property changes ownership or undergoes new construction. In that case, the base year is the year in which the real property (or portion thereof) is purchased, changes owners, or is newly constructed. Read more about Proposition 13 here. 

How we assess your property
There are three different approaches the Assessor-Recorder Office utilizes to find a property’s value:

  1. The Cost Approach
  2. The Income Approach
  3. The Market Approach (the most commonly used method in appraising single-family homes)

The Cost Approach is based upon the total of the current costs necessary to replace a property. This includes the current costs of labor, materials and indirect costs such as architectural fees, land development costs, construction financing, etc. We will also consider any depreciation that may exist.

The Income Approach is the preferred method for appraising income-producing properties (investment properties), such as apartments, hotels, motels, business property, etc. The Assessor-Recorder must consider operating expenses, taxes, insurance, maintenance costs and the degree of financial risk the owner takes in earning income from the property. The expected return for this kind of property is also considered.

The Market Approach is the most commonly used method in appraising single-family homes. This method compares the property to be appraised with comparable properties that have been sold in the same or similar neighborhood. Our office will carefully analyze real estate sales to make sure they are valid market sales. When several sales are confirmed and analyzed, they are considered good indicators of a similar property’s value. Since the appraisal process is designed to determine the “market value,” this method is preferred because it reflects the actions of the majority of buyers and sellers in the market place.

 

Supplemental Assessments

 

The supplemental assessment statutes, enacted in 1983, apply to any property that has undergone a change in ownership or completed new construction since July 1, 1983. The supplemental roll provides a mechanism for placing reappraisals into immediate effect, rather than waiting for the next January 1 lien date. A prorated assessment (the supplemental assessment) reflects the increase or decrease in assessed value that results from the reappraisal. It covers the portion of the fiscal year (July 1 – June 30) that remains after the date of change in ownership or completed new construction.

 

For changes in ownership or completed new construction occurring between January 1 and May 31, two supplemental assessments are issued. The first covers the portion of the current fiscal year remaining after the date of the event; the second covers the entire following fiscal year.

If an assessable event occurs between June 1 and the last day in December, there will only be one supplemental assessment, reflecting the difference between the new base year value and previous values and/or values on the roll being prepared.

If the supplemental assessment is a negative amount, the Office of the Treasurer & Tax Collector will issue a refund on the overpaid portion of taxes.

When is Real Estate reappraised?
Under State law (Proposition 13), real property is reappraised only when a change-in-ownership occurs, or upon completion of new construction. Except for these two instances, property assessments cannot be increased by more than 2% annually, based on the California Consumer Price Index. The property tax rate is 1% plus any bonds, fees, or special charges.
What is a Supplemental Assessment?
State law requires the Assessor to reappraise property upon change-in-ownership or completion of new construction. The Assessor’s Office must issue a supplemental assessment that reflects the difference between the prior assessed value and the new assessment. This value is then prorated based on the number of months remaining in the fiscal year ending June 30. This supplemental is in addition to the regular tax bill. The deadline to file an appeal is 60 days from the date on the supplemental notice.
What is an Escape Assessment?
Escape Assessments are very similar to Supplemental Assessments, whereas the latter are issued for the year of purchase, Escape Assessments are generated for subsequent years up to the current fiscal year. Since the property is considered to have escaped assessments, these bill(s) will help make up the tax differences. The deadline to file an appeal is 60 days from the date on the escape notice.