Understanding Prop 13 Assessment
California has primarily two causes for assessment: change in ownership (also called a transfer) and new construction. A change in ownership is when a deed or deeds are recorded at the Recorder who will then send the data to the Assessor. The Assessor will evaluate the transfer to determine if its re-assessable. If it isn’tre-assessable then it all stops there, but if it is an assessable change in ownership, the information is sent to the appropriate personnel to determine or review the value and modify the base value accordingly. A transfer that isn’t assessable must have fallen within the parameters of an exemption offered by the State. An example of this is a transfer into a revocable trust or an inter-spousal transfer that are explained in our Inherited Property and Exemptions Guide as part of the California Little Black Book.
If a transfer is not assessable meaning it is exempt, the ONLY way the Assessor knows this is via forms that are recorded with the deed. If no exemption applies, the change in ownership is assessable per Prop 13. If you do not apply for an exemption, submit a form or offer accepted documentation for an exemption, you will be re-assessed automatically. The Assessors’ Office is a mass appraisal organization and if you don’t communicate with them through forms and documentation they won’t automatically know how to process your change in ownership.
The other trigger for assessment based on Prop 13 is new construction. The Assessor 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 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 permit information is given to the real property appraisers to update the building record and change the base value if warranted based on Prop 13. Generally, it takes the Assessor a fair amount of time to get to since field work is required to find out what was done to your house and then a valuation procedure follows. If there is a demo, your property taxes will likely be reduced, if there is an addition there is likely going to be an increase. So, if you demo a pool your property taxes will go down and if you add a pool, your property taxes will increase. Construction varies from home to home and it will be evaluated 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 Office of 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 cooperatives is converted into condominiums the Office of 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.
Tags: Real Estate