Top Real Estate Articles

Why Should I Bother Understanding Property Taxes

Jun 26, 2009 Real Estate Properties

Property Taxes are the highest expense after debt service (mortgage) for taxpayers and knowing property taxes and assessments can only benefit you as a taxpayer. The average homeowners who acquired a home in the past six years pays about $7,000 per year in property taxes which equals to almost $600 per month. After ten years the quantity of property taxes paid cumulatively will be more than $70,000! If that taxpayer can lower their assessment where they save $2,000 per year over the next ten years, you will save $20,000! Being a knowledgeable homeowners about the three aspects of property taxes, appraisal, assessment and government process, enables you to save thousands in the long run.

Knowing how to calculate your market value as a taxpayer will empower you not only in property taxes but in all facets of handling your home. These various aspects include refinancing, selling and buying, when you know and understand the fundamentals of all real estate transactions you will be empowered to make sure you are in the best possible position no matter what you are doing regarding your house. The Little Black Book gives you the tools to know how to determine your market value which is a tool you can use over and over again no matter what youre handling with your house. Additionally, the Little Black Book gives you the insight into assessment practice so that you can make sure you are paying what is fair for your home.

Comprehending assessments is very empowering, you wont feel afraid to deal with the Office of the Assessor or Tax Collector because you will understand their internal processes and consequently will know how to assist them, assist you. Property Taxes are pretty simple once you remove the fear and replace it with knowledge. Reducing your property taxes is just the first step towards being a well educated taxpayer and a homeowner who wont be afraid of any government agency or lending institution (bank). Gaining the knowledge and insight of an insider, of a former assessor will empower you in all aspects of your home ownership and you will have tools you will be able to use for every home you ever own.

Taking advantage of the tools available to you and making yourself knowledgeable puts you in the drivers seat. You will know how to take charge and make sure that the market value of your home is being appraised properly and make sure that you are being treated fairly and dealing with competent people whether you are refinancing your home or reducing your property taxes.

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and adviser she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

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Proposition 13: How Does Property Tax Trending Affect My Property Taxes?

Jun 4, 2009 Real Estate Properties

Property tax values in California increase from 0-2% annually, this percentage trend is from on the Consumer Price Index that measures inflation. Usually, California homeowners pay approximately 1.25% of their assessed value in actual property taxes annually. If a home was acquired for $100,000, the taxable base value would be $100,000. Because you pay about 1.25% of the assessed value, your property tax bill the first year would be about $1,250.

California taxpayers the property tax base value is capped unless there is a re-assessable event, the only change is the two percent increase based on Proposition 13. So the second year the trend would max out at a $2,000 increase based on the 2% limit. The assessed value increases from $100,000 to $102,000 which means the property taxes increase from $1,250 the first year to $1,275 the second year. The 2% increase compounds over time, so the amount that it goes up also increases over time because the assessed value compounds. Some years the percentage is less than 2%, based on the Consumer Price Index.

At times, when certain exemptions apply to your assessed value, it will not increase annually. If a home has a Proposition 8 decline in value (temporary decline in value because market decline) the value will not trend. The assessed value will be evaluated annually by the Assessor to decide if it should be modified. Similarly, if there is a Disaster Relief exemption also called Misfortune and Calamity applied to a property the assessed value will not trend, instead the Assessor will visit the property each year to see the property repairs and will either adjust the value or leave it depending on what has been constructed. Additionally, most exemptions for the disabled and/or veterans do not trend either. Generally, your base value will trend up to 2% per year every year unless an exemption that applies.

Usually speaking though most properties in California will increase every year and as a result of this each homeowner will have a slight trend in property taxes every year. What happens over a period of about thirty years is your assessed value will more than double. For example, my parents acquired their home in 1979 for $80,500 and the current assessed value for that residence based on the $80,500 thirty years ago is $138,783 so in thirty years they went from paying $1,006 per year to $1,734 per year. If you start out with a property tax base of $500,000 in thirty years your assessed value will be $887,922 which means you will start off paying $6,250 per year and in thirty years be paying $11,099 per year!

If you understand how reduce that property tax base you will save thousands in the long run! If you acquired your residence for $500,000 and today your home is only worth $300,000 you will save thousands! With a $300,000 tax base you will pay $3,750 per year and in 30 years your assessed value will be about $532,753 so you will pay about $6,659 per year in property taxes. Don’t settle for the temporary reduction in value the Assessor is offering right now called Proposition 8 Decline in Value. So PERMANENTLY lowering your property tax base by $200,000 will save you EVERY year you own your home! The California Little Black Book shows you how!

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

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Reduce Mellow-Roos Property Taxes

Jun 3, 2009 Real Estate Properties

The Howard Jarvis Administration was the driving force in implementing Proposition 13 which put a cap on propety taxes in the state of California. As a result, of Proposition 13 California Residents had to discover different ways to finance government community facilities in their communities like streets, schools, parks, etc. The Mello-Roos Community Facilities Act of 1982 was implemented by the California legislature, the Act created Community Facilities Districts (CFDs) to be established as a way of obtaining this crucial neighborhood funding.

The amount of Mellow-Roos Property Taxes varies from one CFD to another. Typically, an adopted formula that applies to the size of the residence (square footage or parcel size) is utilized to ascertain the amount of particular assessment. Normally, the special property tax and assessments do not go above 1% to 1.5% of the market value of new homes. Additionally, the complete amount of all annual property tax usually does not go above 2% to 2.5% of the homes taxable property base value. So if you are able to lower your taxable base value or in other words, your propety tax you will save a significant amount of money if you have Mellow-Roos Taxes on your house since of the increased percentage in property taxes you pay.

The average homeowner in most urban areas in California in todays real estate market has lost in excess of $200,000 in market value and at the normal rate of 1.25% in property taxes they will save $2,500 per year for every year they own their house! However, that same homeowner at a 2% property tax rate because of Mellow-Roos taxes will save $4,000 per year in property taxes! Learning to PERMANENTLY lower your taxable base value in California is the key to saving thousands over the course of your home ownership which is disclosed in the California Little Black Book.

Generally Mellow-Roos Property Taxes are applicable to recently built communities like sizeable Planned Unit Developments (PUD) where there have been numerous houses built at once and the property taxes are necessary to establish city services. Ive seen Planned Unit Developments that had more than 4,000 houses built! So, the county and city municipalities need to find funds to establish the roads, sewage systems, schools, recreation centers, parks and so much more. Before purchasing a home with Mellow-Roos property taxes you will be informed in the beginning negotiation stages of acquiring the house and while in escrow that these property taxes apply. You won’t be blind sighted by Mellow-Roos Taxes, it is required that you are notified prior to purchasing.

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

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Understanding Prop 13 Assessment

May 31, 2009 Real Estate Properties

California only allows two things that initiate a re-assessment: transfer in ownership (also called a transfer) and new construction. A transfer in ownership is when any part of the ownership interest in the home has changed whether money changed hands or not. The Assessorss Office will review the transfer to see if its re-assessable. If it’s an assessable change in ownership, the data is sent to the appraisal staff to give or review the value and modify the base value appropriately. A change in ownership that isn’t assessable must have fallen within the parameters of an approved exemption. A transfer into a revocable trust or an inter-spousal transfer that are both examples of exemptions allowed in California articulated in our Inherited Property and Exemptions Guide detailed in the California Little Black Book.

When a transfer is exempt, the ONLY way the Assessorss Office knows this is through forms and/or applications which are recorded along with the deed or later requested by the Office of the Assessor to confirm an exempt transfer. So when there is no exemption, the transfer in ownership is considered assessable per Prop 13. Which means if you do not apply for the exemption, submit a form or offer accepted documentation for an exemption, the transfer is considered assessable automatically. The Office of the Assessor is a mass assessment organization and unless you tell them what you need preferably through forms and documents they wont know what may or may not apply to your change in ownership.

The other trigger for re-assessment based on Prop 13 is new construction. The Assessors’s Office is told by the city or county building and safety offices. The city or building and safety give the information about issued permits to the Office of the Assessor for property tax purposes. Keep in mind, your city receives some of your property tax dollars so though its primarily a state tax your local municipality benefits from it. The permits are given to the real property appraisers to update the building record and change the base value if warranted based on Prop 13. Normally, it takes the Assessors’s Office a fair amount of time to get to since field work is necessary to find out what was done to your house and then a valuation process. If there is a demo, your property taxes will likely be reduced, if there is an addition there is likely going to be an go up. So, if you demolish a pool your property taxes will decrease and if you add a pool, your property taxes will increase. Construction varies from home to home and it will be reviewed based on the value that was added or taken away. This is clearly explained in the California Little Black Book with examples and scenarios. When was employed by the Assessor I assessed countless homes where various types of construction was done and would be happy to answer any questions you may have pertaining to this!

Like new construction there will be a re-assessment of a property if the use of it changes. For example if a complex of co-ops is converted into condominiums the Assessor will reassess the value of each unit because the change affects the market value of each unit. However, generally in California there are two events that trigger re-assessment based on Prop 13: change in ownership or new construction.

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

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Test Property Assessments

Jan 30, 2009 Real Estate Properties

Home values dropping? Don’t bet the farm on property taxes getting reduced. Property tax increases to property owners are fast becoming a hot potatoes issue throughout the country. The consuming question traditionally is: how to stall an inequitable burden of appraisal creep and improve the current systems in place without hurting the state’s ability to collect basic revenue.

Basically it is a subject of bringing in transparency into government by cutting expenses as well as insisting that government perks, pay and benefits mirror the private sector.

Government should mirror the private sector in wage and benefits. Instead government take unfair advantage by getting higher wages than the typical WalMart, Home Depot employee, get to retire in 20 years while the average Joe works till he’s 65.

Property tax caps and higher state sales taxes are some of the solutions offered by government. Should you be worried about your property taxes with foxes in the henhouse making the rules don’t rent extraneous jobs and expenses?

The appeals process is always in place for homeowners who believe their values are too high. Numerous areas for price adjustment exist when comparing your home to another home’s sold data. Changes in square foot data, age of home, location, condition, number of garages are some the area that can be adjusted for

Even in regular times routinely a higher error rate exists in property tax assessments. The National Taxpayers Union writes that as many as 60% of all homeowners are over-assessed and not in line with their home value. (”How To Fight Property Taxes” 2004 p.1). This fact alone gives one pause to check their property taxes. It also presents and excellent home business opportunity.

You’ll only be given a short period of time to present the facts of the case, so you will want to point out the key facts about the property. Point out the significant negative market factors that influence the market value of the property.

There are a few exemptions that may cut improper property taxes, but likely nothing as significant as an actual appeal. The property owner will also want to be prepared to respond to any questions that the board of property tax revision may have about the property. Be sure to use a reliable guide in the form of trusted how-to property adjustment self-help book.

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