Time to Lay Groundwork : Some Owners Can Ease ‘89-’90 Tax Bite

If you’re a property owner and haven’t yet paid the first installment on your annual property-tax bill, do it by Saturday to avoid a hefty penalty.

But at the same time, ask yourself whether you’re paying too much in property taxes. If you think that you are, now’s the time to lay the groundwork so the county tax collector’s bite won’t be as bad next year.

“It’s probably too late for you to do anything about it this year, but if you want to reduce next year’s bill, you might want to get started now,” says John Kaczmarek, a property-tax consultant with H. Nelson Rosemont & Associates of North Hollywood.

If you’ve purchased your home since the landmark Proposition 13 took effect on July 1, 1978, your tax for each year is roughly equal to 1% of the price you paid for the property. If you bought the house before that date, your tax is based on its 1975 assessed value.

Regardless of where you live and when you bought your property, Proposition 13 allows your tax bill to rise 2% annually for inflation. On top of that, you must pay your share of “voter-approved indebtedness”--special property-tax increases that voters in your area may have approved for improving schools, parks, police protection and the like.

Your property tax can also be raised if you remodel your home.

Although you can’t really argue about tax increases linked to the 2% inflation increase or voter-passed ballot measures, you may have more reasons to fight your tax bill than you think, experts say.

First, you’ve got a strong case for reducing your taxes if property values in your area have remained steady, or have been falling. Despite all the headlines about California’s hot housing market, “there are parts of the state that clearly haven’t done as well as others,” says Joel Singer, chief economist of the California Assn. of Realtors.

For example, home values in some California towns that are dependent on the troubled energy, forestry or agriculture business have been flat or even dropped over the past few years. So have values in many resort areas, including parts of Mammoth Lakes, Lake Tahoe and Palm Springs.

Even in strong markets such as the Southland, values in some neighborhoods have declined because of a growing crime problem or some other special circumstance. Condominiums in some parts of the state have also fallen in value because of overbuilding.

Values can also be reduced by actions of local government. “If you paid a premium to live on a quiet cul-de-sac and the city decides to open it up to through traffic, you might be able to make a case that your property value has gone down,” says Robert Knowles, a spokesman for Los Angeles County Assessor John J. Lynch.

Assessor Makes Assumption

People who have remodeled their homes--especially those who have recently added luxury items, such as swimming pools, hot tubs and the like--can sometimes wage a successful fight against the county’s reassessment of their property value. That’s because the assessor’s office often assumes that the home’s value goes up by an amount that’s roughly equal to the value of the permits taken out to do the remodeling work, and bases its reassessment on that presumed increase in value.

However, not all remodeling jobs result in a dollar-for-dollar increase in the value of your home. If you spend, say, $40,000 for an extravagant pool, “it might add just $10,000 or $15,000 to your property value,” Knowles says.

Will Need Data

“If you can show that the cost of the improvements didn’t add the same amount to your property value, you might be able to reduce the reassessment.”

If you think that the assessor’s valuation of your property is too high, you’ll need some data to back up your argument.

Begin by asking a local real estate agent for a realistic estimate of your property’s value, a service many realtors will provide for free.

If the potential tax savings will justify the expense, you can hire an appraiser to give a more exact estimate for a price that’s usually between $175 and $300.

Request Application

Next, compare your own estimate of the property’s value to the assessor’s “net taxable value” figure listed on your current tax bill. If the assessor’s figure is higher than yours, you’ve got a good chance of having your tax bill reduced.

To get the ball rolling, you’ll need to request an “assessment appeals application” form from the nearest assessor’s office.

Although most county assessors are headquartered in their respective downtowns, they usually have field offices that are much closer to your home and aren’t nearly as crowded as the main office.

Fill out the appeals form and attach a copy of any documentation that backs up your claim, such as an appraisal or even a newspaper article that describes local market conditions. After you’ve filed your form, a representative from the assessor’s office will either call you or write to you about your request.

“A lot of times, the assessor will agree with you right off the bat, and he’ll reduce your tax bill,” says consultant Kaczmarek.

If the assessor’s representative doesn’t buy your argument, you have a right to appeal your case to the local assessment appeals board.

The board hearings are informal: You present your side of the case, and a representative from the assessor’s office will present theirs.

Visual Aids Suggested

Once again, you’ll want to show members of the board an appraisal of your property, a list of recent sales, and any other evidence that backs up your case. Ronald E. Gettel, author of “You Can Get Your Real Estate Taxes Reduced,” suggests using visual aids and providing a brief written summary of your key points.

If you’re asking for a reduction because your home is in poor shape, it’ll help if you’ve had a contractor prepare a written estimate of how much repairs would cost. Make copies of the estimate, and include it in the information you present to the board.

The board won’t necessarily decide to accept your estimate or that of the assessor; it may pick a value that’s between the two.

For all practical purposes, the decision of the appeals board is final. It’s possible for a property owner to ask the courts for relief, but the time and expense involved makes a court battle economically unwise for all but the largest landowners and developers.

Kaczmarek also notes that you don’t necessarily have to fight the assessor in order to reduce your tax bill. All California homeowners are eligible for a $7,000 “homeowners exemption” that can effectively save them about $100 a year. Elderly or handicapped people, veterans and others may also qualify for special tax-relief programs.