Property Tax Relief – Decline in Value

Richard N. Benson, Assessor - Recorder - County Clerk
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Property tax relief under Proposition 8 (Decline in Value)

In 1978, California voters passed Proposition 8, a constitutional amendment to Article XIII A that allows a temporary reduction in assessed value when real property suffers a decline in value. A decline in value occurs when the current market value of real property is less than the current assessed (taxable) factored base year value as of the lien date, January 1. Proposition 8 is codified by section 51(a)(2) of the Revenue and Taxation Code.

Real property may decline in market value from one lien date (January 1) to the next lien date (January 1); however, it will not benefit from a lower assessment unless its market value falls below the current factored base year value. For example, if you purchase your property during a time when the real estate market falls dramatically, it is likely that your property will benefit from a Proposition 8 reassessment. The reduction in value is typically temporary and may be the result of changes in the real estate market, the neighborhood, or the property itself.

In determining the market value of a property for decline review purposes, the total property value must be considered. Land and structures are not adjusted separately. Only total assessed value can be compared. The lower of current market value or factored base year value is enrolled.

A property that has been reassessed under Proposition 8 is reviewed annually by the Assessor to determine its lien date (January 1) value. The assessed value, of a property with a temporarily reduced (Proposition 8) value in place, may increase each lien date (January 1) by more than the standard two percent maximum allowed for properties assessed under Proposition 13; however, unless there is a change in ownership or new construction, a property’s assessed value can never increase above its factored base year value after adjusting for the annual increase not to exceed two percent annually under Proposition 13.

The assessed value remains at a reduced assessed value until the property’s market value exceeds its factored base year value on lien date (January 1). At that point, the factored base year value is reinstated.

The Marin County Assessor has been and will continue to be proactive in reviewing assessed values to ascertain whether a temporary reduction is warranted.

Filing of the Request for Assessment Review form for the 2016-2017 Tax Year is from July 1 through October 31, 2016, inclusive. If you disagree with an assessment made by the Assessor, and it hasn't been resolved by October 31, 2016, you have the right to appeal that assessment to the Assessment Appeals Board by filing an Assessment Appeal Application between July 2 and November 30, inclusive.

The Assessment Appeals Board is an independent body appointed by the Board of Supervisors. The filing of the application, however, does not excuse you from paying taxes as they become due. To avoid penalties, you must pay your taxes on time.

The Assessment Review (Proposition 8) Process

If you feel the current assessed value of your property is higher than the current market value of your property, you may file a Request for Assessment Review form with the Marin County Assessor from July 1 to October 31, 2016, inclusive for the fiscal year beginning on July 1 of that same year. The form is available on the Assessor’s website beginning July 1 each year.

The Request for Assessment Review form is accepted from July 1 through October 31, 2016, inclusive. If you disagree with an assessment made by the Assessor, and it hasn't been resolved by October 31, 2016, you have the right to appeal that assessment to the Assessment Appeals Board by filing an Assessment Appeal Application between July 2 and November 30, inclusive.

The Assessment Appeals Board is an independent body appointed by the Board of Supervisors. The filing of the application, however, does not excuse you from paying taxes as they become due. To avoid penalties, you must pay your taxes on time.

Request for Assessment Review forms received prior to July 1 will be held and processed as of July 1. When the assessment review is completed by the Assessor, you will be notified by mail as to the results of the review.

A request for review submitted to the Marin County Assessor does not meet the requirement for filing an Assessment Appeal; you must file an Assessment Appeal Application with the clerk of the Marin County Assessment Appeals Board.

Assessment appeals under Proposition 8 (Decline in Value)

A Notice is sent at the end of each June to all property owners of properties currently in decline (market value falls below the current factored base year value). This notice tells you what the assessed value will be for the upcoming tax year.

If you disagree with the value, you have until November 30 of that year in which to file an Assessment Appeal Application with the Marin County Assessment Appeals Board.

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Annual review of property values under Proposition 8

The Assessor is required to review annually the temporary reduction in value as of each lien date (January 1) following the initial reduction. The Proposition 8 value can be further reduced, or may increase depending on the property's market value as of the lien date.

A Notice is sent at the end of each June to all property owners of properties currently in decline (market value falls below the current factored base year value). This notice tells you what the assessed value will be for the upcoming tax year. You must annually review the assessed value of your property to determine if you need to speak with the assessor or file a formal Assessment Appeal Application with the Marin County Assessment Appeals Board.

Restoring property values after Decline in Value reductions

Under Proposition 13, factored base year values may not be increased more than two percent per year. However, this two percent limitation applies only to increases in the base year value. Under California Revenue & Taxation Code Section 51, temporarily reduced values are not considered base year values, but are declines in value; thus a property assessed under Proposition 8 is not restricted to the maximum two percent increase. When real estate values increase due to market conditions, the assessor must assess properties to either their original base year values, adjusted for inflation up to two percent per year, or to their current market values, whichever is lower. This may result in increases to temporarily reduced assessed values in excess of two percent from one lien date (January 1) to the next.

Property tax refunds under Proposition 8

If you have already paid your property taxes for the current tax year and the Assessor reduces the assessed value of your property, you will receive a refund. Refunds are processed by the Marin County Department of Finance. Typically, a refund is processed and a refund check issued within a month or two from the date the Assessor sends you the letter stating that the value has been reduced. If you have been waiting longer than a month, you may call our office at (415) 473-7215 or email. Please be sure to include your name, mailing address, the subject parcel number, and the amount of the reduction the Assessor is processing and we will promptly research the status of the refund.

What to do if you have not yet paid your property taxes and the Assessor is reducing the assessed value of your property

Even if you think the Assessor will reduce your assessed value, you should pay the property taxes you were billed. Penalties are not forgiven because you were waiting for a revised bill. It is best to pay the tax bill you have. If this results in an overpayment, the Marin County Department of Finance will send you a refund.

Why identical houses may be assessed differently

The assessed value is based on the fair market value of the house on its purchase date. Therefore, even though two houses are exactly the same, they may have a different value depending on when each house was purchased. Under Proposition 13, assessments for the year 1975-76 serve as the original base year values. Thereafter, a new base year value is established whenever property is purchased, newly constructed or changes ownership. The base year value is increased a maximum of 2% per year. Different purchase or construction years can result in vastly different assessments.

For Example:

  • Homeowner A purchased their home in December 1982 for $50,000.
  • Homeowner B purchased the same exact model in December 2007 for $500,000.
  • Homeowner A's factored base year value is approximately $89,000 as of January 1, 2016.
  • Homeowner B's factored base year value is approximately $555,000 as of January 1, 2016.
  • The actual market value of both homes, as of January 1, 2016 is $525,000.
  • Homeowner A's property tax bill will be based on their factored based year value of $89,000 since it is lower than its market value of $525,000.
  • Homeowner B's property tax bill will be based on the actual market value of $475,000 since it is lower than the factored base year value of $555,000.

For additional information

If you need additional information or have more questions, please contact the Marin County Assessor by email or phone to (415) 473-7215. The office of the Marin County Assessor is located at Marin Civic Center, Room 208, 3501 Civic Center Drive, San Rafael, CA. Office hours are 8:00 AM-4:00 PM Monday through Friday.