Property tax assessment

Property Tax Assessment

When you are looking at buying a home or selling your home, some people are under the impression that the assessed value on your property tax bill is a good way to figure out the value of a property. Typically, property tax assessment values are updated periodically, but might not take any market conditions into consideration, like an appraisal does.

Property Tax Assessment: An essential element of property ownership is (like it or not) Property Taxes. And in California, the entire Property Tax concept is driven by the Jarvis-Gann Act, generally known as Proposition 13. Enacted in the late 70's, in response to skyrocketing property values, Prop 13 places a limit on how much the taxable value on a given property can go up in one year.When a property is purchased (or otherwise changes ownership), the County Assessor enrolls a value for that property. This value is the Assessor's best estimate of market value and in most cases, this is the purchase price. The tax year following the year of purchase is called the Base Year, and the value enrolled is called the Base Year Value (BYV).

Property taxes are based on the value of your home multiplied by the current tax rate. When you make improvements or additions to your home, your local government can reassess the value of your home and raise your property tax liability accordingly. Likewise, with many property values dropping across the country, property owners have the right to request a property value review called a reassessment. This reassessment can be done by a private firm or by your local government. Often, requesting this service from your local government will cost less or even have no cost.

Due to the recession and weak real estate market many of us received automatic reassessments from our local municipality. Some may have thought this would result in lowered property taxes for the year. Not the case for the majority of us.

In order for the town or county to operate they need the revenues from our homes. Therefore, most adjusted the rate up to compensate for the lowered property value. I encourage you all to research this to understand what your financial obligation is.

Before you get started take a look at your current tax appraisal. Check measurements, square footage and any description of number of rooms or whether or not a basement is finished, etc. Make a list of any errors. You should also take a look at your neighbors' property values. These can often be found online at your county auditor's website. You can also get a quick idea of these values by visiting sites such as Cutmytaxes, Zillow or Trulia and searching homes in your area. If their values are much lower than yours, that is a good place to begin with appealing your own property tax liability.

As you can see, a property tax assessment value may not reflect the same thing as an appraisal will. Lenders will require an appraisal, but if you are paying cash, you will want to have an appraised value, versus an assessment value to make sure you aren't paying more than market value. Because of changes in the real estate markets, an appraisal is considered the best tool for assessing the value of a home.

During an appraisal, they will consider similar homes that have sold and replacement cost formulas based on current prices. Since there can be fluctuations that are more pronounced in certain markets, this is the best way to find out the value of your home or one you are going to purchase. Assessments are not as conclusive as an appraisal, when it comes to determining the true market value of real estate.