PROPERTY TAX ASSESSMENT NOTICES SENT OUT
If you own real property in California, the local county tax collector (ours is Shabbir A. Khan) sent you a property tax assessment notice that states the property’s valuation on which the future tax will be based. Each year this bill seems to increase a little more, but you begrudgingly pay it. Why?
When you purchased your property, the county assessor’s office determined the value of the property from the sales price. This valuation is called the base year value and you will pay a 1% property tax on this value each year. In years after the purchase of the property, the county assessor’s office can increase the base year value to match inflation, but not more than a 2% increase per year. So, if you bought the property for $100,000 and there is an inflation factor of 2% in the next year, your property’s adjusted base year value is $102,000. The property tax for the second year would be 1% of the adjusted base year value, or $1,020.
Sometimes your property tax bill may have even gone down. Under the California Constitution Amendment Prop 8 (1978), when a property suffers a major decline in value, the county assessor’s office may lower your property tax bill based on the reduced fair market value. This lower value tax bill will continue until property prices rise again up to the base year value without a 2% limitation.
If your property is located in San Joaquin County you can file an Application for Changed Assessment with the Clerk of the Board, San Joaquin County at 44 N. San Joaquin St., Ste 627, Stockton, CA 95202 before November 30. You will then have an opportunity to argue your opinion of your property’s value. Your opinion of value needs to be supported by proper evidence, typically an appraisal. If you do not agree with the assessor’s opinion, you may protest in this manner.
The county assessor’s office is allowed to change the base value of the real property when there is a sale of the property (even a partial sale) or there is new construction. If the real property is owned by a legal entity, such as a corporation, LLC or partnership, then the county can change the base value of real estate owned by the entity when someone new gains control of the entity or more than 50% of the original company ownership changes hands. You are required to file a form with the State Board of Equalization, BOE100-B, within 90 days. Failure to do so makes you vulnerable to a penalty of 20% of the assessed value. When this happens, the county will send out a notice to the entity that states they are changing the base value of the property owned by the entity and assessing a supplemental property tax from the date of transfer.
Can you do anything about this? Yes, if you feel their valuation is not the fair market value of the property or there was no event that would cause a reassessment, you can appeal the tax bill to the county assessor and then to the county assessment appeals board. There you can present evidence of valuation or argue why the property did not change hands. To appeal a supplemental tax you have 60 days from the date of the notice to file an Application for Changed Assessment with the Clerk of the Board, San Joaquin County.
The county may also send out a tax bill known as an escape tax assessment. This occurs because some event happened that increased the base value of your property (change in ownership or new construction) and the county did not immediately issue a tax bill or you did not inform the county about the change. Years may have passed from the taxable event before the county sends out an escape tax assessment. This bill is usually large, as several years of property taxes are lumped together with interest. These bills are appealable as well, if you think the county is wrong, by following the above procedure within 60 days of the notice. We are informed that San Joaquin County is currently working through the changes from 2009.
In some instances, the county may assess escape tax bills for more than a decade worth of tax years. This may happen if the owner of a company that owns land dies and the children inherit the property, but the county was not informed of the change in ownership. To prevent this escape tax assessment, the children must file Form BOE-100-B with the Board of Equalization at County-Assessed Properties Division within 90 days of the initial transfer, which did not happen. However, if no Form BOE-100-B is filed, then the county has the ability to retroactively assess tax for all years from the date of the change in ownership.
The crucial factor in appealing any of the mentioned tax bills is filing your property tax appeal on time. If you file the application late, it will be rejected and you will be denied your appeals hearing. You will not be able to re-file the appeal or file a lawsuit in a California Superior Court as you must first exhaust your administrative remedies before a lawsuit can be filed and the timeline passed.
– Richard S. Calone is a Partner at Calone & Harrel Law Group, LLP who concentrates his practice in all manners of Taxation, Real Estate Transactions, Corporate, Partnership and Limited Liability Company law matters. He is a certified specialist in Taxation. Mr. Calone may be reached at 209-952-4545 or firstname.lastname@example.org