Lots of us have had to make a big decision in our lives. Many of us have had to make this decision a few times. Should we rent or buy a home? It may seem like the answer should be obvous, but it really is not. If you are thinking about your options, consider some of the real costs of home ownership.

You will probably need a large down payment. Most of those 0 money down schemes are gone. These days, a twenty percent down payment is back in fashion. Do you have this money? And after you put down this large amount, will you have any savings left? I think we have all learned that it does not do to be house poor in this day and age.

Think about the length of time you plan to live in the house you want to buy. Home owners, who stay put for years and decades, tend to be more satisfied with their purchases. If there is some chance you will have a job change or transfer in the next few years, you should weight that in your decision. It is so much easier to get out of a lease than a home purchase! It should be obvoius that you will not be able to get any guarantees that your home will sell for a good price when you need it to.

When you consider buying a home do you only compare rent payments to mortgage payments? There are many other costs associated with owning a home than with renting. Most renters pay rent. They may also pay renters insurance which usually does not cost very much. But home owners must pay home owners insurance premiums, property taxes, home repair bills, and also pay for upkeep. Do you have the money to cover all of these costs?

How many times have you called the rental office when your dishwasher did not work or the heat would not come on? They call a repair man for you. Now it will be your duty to get things fixed. It will also be your duty to pay the bills. Another budget item will be setting aside some cash for emergency repairs.

Also consider homeowners association fees. In some neighborhoods, these are moderate, but in some neighborhoods they can cost hundreds or thousands of dollars every year. And things can get reallly ugly when these are not paid.

Almost all homeowners must also carry homeowners insurance policies. The cost depends upon many factors, but it is usually a few thousand dollars a year. Renters buy renters insurance, but that is usually very cheap since it only covers contents.

Now many realtors will cite the tax benefits of property taxes and mortgage interest. But you can only take advantage of this if yours are higher than the standard deduction that everybody gets to take.

I understand the advantages of home ownership. But I also understand that the decision to buy your own house should not be made lightly. Make sure you really figure out how much it will cost you to own before you buy.

Should you own or rent homes?

Ask the tax assessor what homes he is using to base the value or your assessment on. This way you can scrutinize those home and find comparable that are more like your home if he/she is off-base. You will have to negate the argument of the tax assessor regarding the homes he chose and introduce the homes you have chosen.

Make a written request via a fax to the appraisal district. Get that information in advance so you are prepared. Show how those homes do not compare to yours. This is an adversarial confrontation and you need to be armed with the evidence that the opposition is using. The Freedom of Information Act allows you to get this information.

Use photos to prove your point. Show how the tax assessors chosen comparable is not similar to yours and how the comparables you choose are comparable. Make any adjustments you need to make for differences in location, sq. ft. size differences, condition, age of the home or similar type adjustments

As you filter through the sold homes you are considering, earmark those that are in your neighborhood. Location if the most important feature since the market value of the same style home is drastically different from say a good neighborhood to a bad one. Buyers pay more for good schools and other positive neighborhood amenities.

Look for similar features to your home such as living space square footage, similar number of baths, bedrooms, age of home, condition and style of home, swimming pool, decks and so forth. You’ll be cherry picking ones that sold reflecting a lower market value while the tax assessor will likely cherry pick those with higher values. You’ll need to defeat his argument and get your side of the story to look like the natural choice.

There will be differences in square footage, number of garages, with or without decks, patios, swimming pools, etc. and you need to make dollar adjustment to equalize features that are not similar to your home. These are simple plus or minus adjustments.

After you’ve put together your information it will be time to make an appointment with the tax assessor. Likely, the will not budge from his position and you’ll have the take it to the next level of appeal.

When you win a property tax appeal it is not only for this year, but your base is established until the next community blanket reassessment. That blanket reassessment may not happen for 8 or more years in the future.

Before I get into this topic let me define PUD: PUD stands for Planned Unit Development. A PUD is essentially a single family residence and the legal ownership of the home is legally defined that way. The biggest difference is that a PUD is part of a neighborhood, part of a larger development similar to a condo complex. You will own your residence and still pay an association fee per month to maintain community areas such as parks, pools and sometimes recreation rooms. The association regulates neighborhood improvements so if you want to make major changes to your home or want to paint your house you will need the homeowners’ association’s approval. Since a PUD is basically a single family home that is also part of a larger community you are liable for your own repairs and maintaining your own homeowners insurance since you own the land and the structure.

A townhouse and condominium (condo) are for legal purposes the same thing in terms of ownership, there is no difference in ownership. The distinction between these two words refer to the building style. Usually, a condo is more of an apartment style structure as opposed to a townhouse that usually looks like an independent home that may or may not have attached walls to the rest of the townhouses in the same community. When you acquire a condo or townhouse what you are acquiring is cubic airspace of a specific unit with an interest in the common elements of the property. The common elements including the lobby, swimming pool, recreation area, land, etc. Legally you own airspace, you dont own land or a building.

Every condo and townhouse community has a homeowners’ association and that association is responsible for maintaining the grounds, structures and systems of the complex. That is the reason the association fees are pretty high. You wont need homeowners insurance though because this is part of what is covered by your association. Unlike owning a house where you may have a huge repair to do every five years, you pay monthly and the money accumulates with the association and then is used when needed to maintain the community and all of the structures. If you are looking into purchasing a condo or townhouse it is important to find out about the association. If the association is bankrupt you will have problems in the future with the value of your condo and with any repairs that the community may need.

Co-Op is short for Cooperative and is called an Own-Your-Own also. Structurally similar to a condo, like an apartment you own. A co-op is when the building itself is a corporation that holds title to real estate. As an owner, you own stock in that corporation and you are granted the right to occupy as a shareholder in that corporation. Co-ops like condos have a homeowners’ association that handles the community structure and land. The association has a monthly association fee to maintain the complex. As a shareholder (owner) of a co-op you wont need homeowners’ insurances since the association covers it. Cooperatives are common on the east coast and sometimes getting a loan for this type of real estate can be challenging in an area like Los Angeles where cooperatives are rare.

A house also called a single family home or single family residence is the simplest type of ownership. Legally called fee simple or fee simple estate. As the owner of a home you own the building and land beneath it and have all legal rights to the property. You are responsible for all repairs since you own it all! You need to have homeowners insurance and pay for repairs the house may need. There is no larger community you are a part of and consequently no homeowners’ association to handle problems or cause problems.

When you are shopping for a home, condo, co-op or PUD know that there are FOUR costs you need to factor into your monthly overhead: mortgage payment, property taxes, homeowners’ insurance and association fee. Your mortgage payment is only the beginning!

When Proposition 13 passed in 1978, it extremely limited the capacity of local governments to use property taxes to construct public improvements and services. As a result, Californians had to find new ways to fund public improvements in their neighborhoods such as roads, schools, parks, etc. The Mello-Roos Community Facilities Act of 1982 was enacted by the State legislature, the Act enabled Community Facilities Districts (CFDs) to be put into place by local government agencies as a means of obtaining this critical neighborhood funding.

The amount of Mellow-Roos Property Taxes is different from one CFD to another. Normally, an approved method that pertains to the size of the house (square footage or parcel size) is utilized to ascertain the amount of specific assessment. In general, the special property tax and assessments do not go above 1% to 1.5% of the market value of new homes. Additionally, the total amount of all annual property taxes usually does not go above 2% to 2.5% of the residence’s taxable property base value. So if you are able to lower your taxable base value or in other words, your propety taxes you will save a significant amount of money if you have Mellow-Roos Taxes on your home since of the higher percentage in property taxes you pay.

In California many homeowners in most major city areas have lost in excess of $200,000 in market value on their houses and at the normal rate of 1.25% in property taxes they will save $2,500 per year for every year they keep their residence! Yet, that same taxpayer at a 2% property tax rate based on of Mellow-Roos taxes will save over $4,000 every year in property taxes! If you are paying Mellow-Roos and have lost $200,000 since you purchased your home and let’s say you intend to stay in your home for the next 10 years, you will save $40,000! Don’t settle for Proposition 8 the temporary decline in property taxes, its only temporary. Learning to PERMANENTLY lower your taxable base value in California is the key to saving thousands over the course of your home ownership which is disclosed in the California Little Black Book.

Generally Mellow-Roos Property Taxes are applicable to recently built communities like sizeable Planned Unit Developments (PUD) where there have been numerous residences built in a short period of time and the taxes are necessary to establish city services. Ive seen Planned Unit Developments that had more than 4,000 houses built! So, the county and city governments need to find funds to build the roads, sewage systems, schools, recreation centers, parks and so much more. Prior to buying a residence with Mellow-Roos property taxes you will be notified in the beginning negotiation stages of buying the house and during escrow that these property taxes apply. You won’t be blind sighted by Mellow-Roos Taxes, it is required that you are informed before purchasing.

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.

These three offices handle various aspects of your property taxes. Some counties merge these departments since they are not as large and dont have a need for three different offices. Everything begins with the Assessors Office, first in determining what is assessable and then processing the appraisal of that re-assessment and all of these decisions are made by your state law.

Assessments go through a procedure within the Office of the Assessor, to determine the value for that assessable event or assessment year. At the end of the fiscal year all of the values for the year are sent to the Auditor-Controller to apply the correct tax rate (percentage) to each parcel which varies in each tax rate area and determines the actual dollar amount you owe. The tax rate is set based on the area you live in and the local taxes applied to your local community in addition to the state levied taxes. The tax rate is usually a percentage of the value determined by the Assessor.

Additionally, if in a particular tax rate area there is a special assessment or other types of property taxes such as direct assessments they get added on by the Auditor-Controller. Then finally that information is sent to the Tax Collector’s Office who sends out the bills, collects the money and deposits it into the County Treasury. These three departments make up the property tax branch of your local county government and each handle their responsibilities independently.

For example, if you found out you had a lien or delinquent taxes on your property, you need to go to the Tax Collector’s Office to pay them and have the lien removed and the records brought up to date. However, if you had an issue with the amount of property taxes or the value in which your property taxes are based on you would contact the Office of the Assessor, because that is what the Office of the Assessor is responsible for. For example, if you had a value issue, you would go to your Assessor, and how to do this is detailed in both the California Little Black Book and also the National Little Black Book.

When the value is corrected by the Assessors Office it is sent to the Auditor-Controller’s Office who would correct the actual dollar amount owed, and then the Tax Collector corrects the bill and then your adjusted bill is generated. Usually, the two offices that handle public service are the Assessors Office and the Tax Collector’s Office, the Auditor-Controller’s Office is the silent partner of the property tax banch. Generally, public service is resolved before it gets to the Auditor-Controller and is requested by the Assessor.

This is an intricate process and at times values are adjusted by the Office of the Assessor and the actual bills sent out by the Tax Collector are not corrected. This occurs when the Auditor-Controller, for whatever reason has not corrected the right bill or there was a procedural mistake. Always keep in mind all of these departments are mass processing organizations and do the best they can and it is your responsibility to make sure that your values are accurate. When this happens a special request needs to be sent by the Assessors Office to have the value corrected and then it is forwarded to the Tax Collector who will issue a new bill. Remember all problems can and will be fixed with a little bit of effort, understanding and patience.

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

Simply, because they are handling your assessment!

Mistakes are often made given there is so much work and so many properties to value! Simply remember the Assessor is a mass appraisal organization and they do not necessarily have the time or the staff to make sure every single value is perfect. If there is a mistake|an error in your building information or a value that is far above than what it should be, it is not intentional nor is it personal.

The Assessor’s Office staff can make your life easy and can also make it more complicated. If you’re a pain to deal with, no one will want to help you, even if the mistake is the Assessors fault. The staff do not like being dealt with like individuals who are out to get you, because they arent. The personnel are not affected by how much you pay in property taxes, or your records and values, so be pleasant. Quite frankly, most of them don’t care because their jobs are secure, so whether they help you or not they’re still getting paid. Be a person they want to assist so that you can get the most of what they know and who they know. Remember, even if the person you are speaking with can’t help you, most likely they know the person who can and have influence with that individual.

As an employee of the Office of the Assessor there were front doors slammed in my face, I was yelled at by homeowners. Sometimes I was treated like I had no knowledge of property tax law or even appraisal and I was not apt to help individuals who dealt with me like that. Part of myresponsibility to assist them, to be a civil servant. Yet, after working for years in an environment where the public resented me and the job I did it was very taxing. Remember, the Assessor himself is a person and the staff are human beings and they have been yelled at enough already. They are yelled at everyday and most of the staff work there for years.

Imagine what its like to be in a working environment for years where most people you deal with detest you! Its not good! Dont be one more they add to that list! The staff you deal with who work for the Assessor, influence your property tax value and records, always remember that! Most of them have worked with thousands of homeowners and can read you like a book, so be kind and patient and understand they are not out to get you. The staff of the Assessor’s Office, are simply doing their jobs. Being angry and patronizing will not get you the result you are looking for. You may be surprised at what being kind and patient will get you.

About the Author: Valerie Faltas, Property Tax Expert worked in assessments for years, 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

Prop 8 Exemption is a supplement or exemption to Prop 13 which still applies today to all property owners in California. Prop 13 was put into place in 1978 to control the amount of property taxes paid by homeowners. Prop 8 is an exemption to Prop 13 which says that your assessed value should not be higher than market value for any given year. So, when the market is declining like it is today and has dipped below your current assessed value, you are entitled to some relief.

This appears to be great news however, it is only a SHORT TERM solution. The Prop 8 Exemption is generally something you have to file for. The way The Prop 8 Exemption works is like this, your valuation date for the current fiscal year is January 1st. So, the comparable sales for your residence for Prop 8 purposes, need to have closed within the first three months of the year; from January 1 to March 31 for that given year based on the language of the law. For example to get a The Prop 8 Exemption reduction for 2009, the comparable sales must have closed between January 1st, 2009 and March 31, 2009 based on the law. Basically in order to get a reduction in value there has to be closed sales of similar properties within the first quarter of the designated year that are lower than your assessed value.

The problem here has several reasons: one of the most significant is that the first three months of the year is the slowest time for comparable sales because those tranactions started during the holiday season which is the slowest time for real estate. Real estate sales take 30-60 days to close, so most of the sales that close within the first quarter of the year opened escrow during the holiday season. The sales to choose from are more sparse than later on. When the market movement really starts to show during the second and third quarters of the year you are out of luck because those sales are outside the perimeters for a Prop 8 reduction.

This is not the best solution because it is only a SHORT TERM reduction in value, so when the market starts to climb back up, and it always does, your old base value gets restored to what it would have been had you never gotten the reduction. Many property tax specialists appear in declining markets claiming to be able to save you on property taxes. They send mailers that look like they are from the Assessor which they are not and sadly, homeowners pay good money to have their taxes “lowered” only to have their tax bills revert to higher rates once the market recovers. Truthfully you never pay the Assessor for any service or review of your value - you pay for that with your property taxes already!

A typical example of a Prop 8 Exemption on an average home in California. So, I purchased a residence in 2005, at the hight of the market, for $500,000, at a 2% trend my current assessed value for 2008 is $530,604. My market value as of the first of 2008 is near $430,000 and as a knowledgeable tax payer I apply for a Prop 8 Exemption to get a reduction. So, for 2008 I have a nice break, Im paying property taxes on a value that is $100,000 below my trended base value and saving around $1,250! The real estate market goes down and based on the Assessors review, the Prop 8 Decline value is still given for 2009. So for 2009 I am paying based on the $430,000 which is even better this year since my trended base in 2009 would have been $541,216 and so I am saving around $1,390! Awesome!

Now, the real estate market starts to turn around, and the market values are going up and for 2010 my market value is upwards of $500,000, so the Assessor alters my Prop 8 Decline value to $500,000 which is lower than my 2010 trended base value of $552,040. Absolutely, not as good as having $430,000 as my value. Yet, I am still saving and this year my Prop 8 Reduction value is $52,000 lower than my trended base value I am now saving $650 a year in property taxes. Its now 2011 the market is going up again and now my market value is somewhere around $600,000 and the assessor restores my value to the trended base, which now is $563,080. So, now I’m paying $7,038 in taxes. I so wish I still had that $430,000 property tax base

In California there is a way to PERMANENTLY lower your property tax base utilizing today’s declining market, based on Current Property Tax Law and essentially side stepping Prop 8 and all of its limitations. Also, find out how to avoid assessment when you inherit property and how to use all exemptions allowed by Current Property Tax Law.

I applied with the Los Angeles County Assessor early 2003, I was one of 900 applicants for 25 positions as a Real Estate Appraiser Trainee. I was one of the 25 chosen for the class they hired that year. As a trainee I went through an 18 month probation period and a 12 month training with them including classroom training, many exams, field training in all aspects of real estate appraisal, property tax law and the processes within the Assessor’s Office. If had I failed any one of my series of exams or gotten a bad performance review I would have been kicked out of the program.

I took an exam with the State Board of Equalization to be Certified as a Property Tax Appraiser at the end of the year long training program. Then I was promoted by the Los Angeles County Assessor from Trainee to Appraiser. Seperately, I sought to become a licensed Residential Appraiser through the Office of Real Estate Appraisers so if I wanted to I could do private appraisals, ones used by banks for loans. I personally acquired my first house at the age of 23, my second at the age of 24, my third at the age of 25. As I was learning appraisal and assessments I was also buying, selling and updating homes so I saw all aspects of real estate. In addition, I had been the administrator of a family estate while in college so I had already been a propety manager, and handled real estate within trusts and estates and my experience working for the Assessor and in real estate had shed light on what I had done years earlier with my family.

Being employed by the Assessor’s Office is considered to be impressive given the nature of the job. Determining assessments, people paid property taxes based on the values I determined. I affected over 6,000 properties in Los Angeles County while I worked for Assessor’s Office|Assessor|Office of the Assessor. The prestige comes from the nature of the position and the understanding gained through it. There is definitely a blown up sense of power that goes along with the position; if homeowners really saw the other side and fully understood the law and how it works, the prestige would be gone. The bottom line is always the numbers.

The position I had with the Assessor fluctuated with the real estate market: different work during different markets. I had an excellent reputation within the Office of the Assessor, was known for being swift, proficient and thorough. I was picked by management several times to work on special projects and assist with other areas within the Office. When I left the Assessors Office to attend law school (which I dropped out of), months and more than a year after I left, homeowners would ask for me. I used to help them more than others who worked there. Even the clerks in the office would come to me with issues since they knew I would help them. I had a great future ahead of me with the Assessor had I chosen to stay there.

NATIONALLY: In almost every state in this country property taxes are based on market value. Market value is the key. The biggest problem is that every Assessor in every county in every state is a MASS appraisal organization. They have hundreds of thousands of assessments to complete year after year and usually are understaffed. They exist to serve, to do their jobs to follow the law and to be as fair as possible. So often values aren’t where they should be because of the simple fact that they don’t have the time or the man power to be more thorough.

CALIFORNIA: California Property Taxes are different than the rest of the country. As the real estate market was declining taxpayers were calling and coming into the Office looking for help. I was assistingtaxpayers get the temporary tax break called Prop 8 and I knew a much more bigger break they could get. I know a way for taxpayers in California to get a PERMANENT break in their property taxes. The typical taxpayer in an urban area lost over a $250,000 in value which means $3,000 PER YEAR in property taxes! Totally legal, just out of the box - really just a different way of looking at the law and it wasn’t okay for me to share. Most who work for the Assessor aren’t aware of this loophole! Day after day, taxpayer after taxpayer…I knew a much better way. Most taxpayers wouldn’t qualify for the temporary break based on the perimeters of it. I felt compelled to make this loophole known so that I could help taxpayers in a substantial way. So, I left and created the Property Tax Little Black Book.

If a taxpayer can get their loan modified to permanently lower how much they owe on their home why shouldn’t the same be applicable to their property taxes? The law is ALWAYS on the taxpayers side…they just dont know it!

While I worked for the Assessor I processed single family home values at 3 or 4 an HOUR… some were higher than they should have been since I didn’t have the time to make sure they were right and some were lower also. Only if the homeowner complained was the assessed value researched. All homeowners need to learn some basic appraisal and assessment to ensure they are aren’t overpaying property taxes. Understanding is the key. Every homeowner can understand and handle this process to feel in control of what they are being taxed on their house.

Truthfully the Assessor is afraid of the people because the people, the tax payers, the homeowners are the ones who keep them in office. No one in assessments wants to deal with a disgruntled tax payer!

Bottom line: the Assessor is not out to get the taxpayers. Education and eliminating fear in times like today. This is the AMAZING news about a low real estate market! Its time for taxpayers to save and educate themselves. This low real estate market means: modified loans and lower property taxes! Yes, the real estate market is down and this is how it can help you! This is one of the numerous reasons this economy is good!

My vision, my goal is to empower the homeowner! No more fear. Fear comes from ignorance and my goal is to educate and ultimately dispel fear. In a time of turbulence and change, it is more true than ever that knowledge is power. - JFK Feel free to contact me! I look forward to hearing from you.

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.

It is very common for the Assessors property records to be inaccurate given the fact that the Assessor is a massive assessment government entity and the work was processed too quickly, or the information changed without the Assessor knowing or there was documentation that slipped through the cracks. There are many reasons for this, however the good news is that the answer to this problem is simple. Simpler than you may think. Every property there is a building record with the Assessors which includes a drawing of the shell of the structure and details about the house.

Some Assessors keep much more detailed records depending on their tools, work load and staff. However, all records for your property are for valuation purposes even though other real estate professionals use these records to verify home records. From the diagram the square footage of the building is calculated and the description will include the type of property, the use type, and any other information that may be relevant to the property and its value.

The Assessor’s records are in reality is generally used by real estate professionals as official. Essentially, making sure your records are accurate will more than likely affect the value of your home since the banks, buyers, sellers, etc. all use these records to confirm the structures on your property. The Assessor’s records affect most real estate transactions despite the fact that the Assessor makes no representation of having information for anything other than assessment purposes.

If the records for your house are wrong, it easy to adjust and/or bring them up to date. Contact your county Assessor and your request will generate a public service request and ask to have the information updated. The public service request will be forwarded to an appraiser who will talk with you and/or make an appointment to possibly visit your property for measurements or find out from you over the phone what the differences are and then make the adjustments accordingly. Frequently, the Assessor will use the information you give them over the phone for something simple such as a bedroom or bathroom count adjustment. Generally, this is very easy for the Assessor to process. If there is some type of new contruction to your property that you constructed and has not been assessed yet, it may result in more propety taxes however, if the error is the Assessor’s fault there is a statute of limitations so ask about this when you speak to them and make sure you document their response. Remember, there are many facets to assessments and you want to be covered should you be misinformed.

However, if the changes were there before you purchased the house then it is considered to be maintenance before transfer and since you purchased the residence with the construction there, very likely no assessment would be added. The reason for this is because you paid for what you when you purchased the residence and so there really has been no change in value as opposed to if you added to your residence then there is an adjustment in the value. The Assessor’s Office may ask for information pertaining to the permit or documentation as to what the property was when you received it such as the listing information however this will vary case to case. Often, the Assessor will go off of your word and will update the records accordingly. This is very common and a simple procedure, simply ask.

One key factor to remember when looking into this is that the Assessor’s Office is separate from your city. The Assessor simply wants accurate data so that any valuation of your home they do is accurate. They normally don’t care if what you have on your property is legal or not because even when illegal it can add value. The Assessor’s Office is not normally in the habit of reporting what is on your property to your city so this can be much easier than you think. Often when homeowners think of the Assessor or the City they mistake all of these different government entities as being in communication with one another, normally they aren’t and they are just doing their jobs.

About the Author: Valerie Faltas, Property Tax Expert worked in assessments for over four years and assessed over 6,000 properties. Valerie is also a licensed appraiser, real estate investor and consultant. She left the Assessor to make information public she could not disclose while she worked there.

Current California Property Tax Law applies today to all property owners in the state of California. Current California Property Tax Law was implemented in 1978 by voters to control the amount of property taxes paid by homeowners. Before Prop 13 there was no limit to help taxpayers on property taxes. The assessed value was based on the changing home values every year and because the market values increased significantly over time in California, the amount of property taxes increased substantially. As the values of the homes went up over time, older folks on fixed incomes were being driven out of their homes unable to pay the property tax increases.

Prop 13 was passed to assist seniors on fixed incomes who could not adjust to increasing property taxes. This amendment was initiated by Howard Jarvis was a result of a ballot initiative passed by voters in June of 1978, called People’s Initiative to Limit Property Taxation. Prop 13 is an amendment to the California Constitution and is still a hot topic today because of its limiting nature and the imbalance it has created in terms of how much each taxpayer pays. Taxpayers who bought thirty years ago dont pay nearly as much in property taxes as those who have acquired homes recently and as a result of this many homeowners feel Current California Property Tax Law is unfair and should be repealed.

Prop 13 applies to all who own property in California even those who have purchased recently. What Current California Property Tax Law does today is establish a cap on the amount of property taxes the government can charge you. The initial purchase price of your property, as long it was a market transaction, becomes your base value.

A market transaction is when your purchase price is market value it will be accepted as your taxable base value. If you purchased your house way below market value the Assessor will assess you at market value because that is what California Property Tax Law states your taxable base value is based on. Your assessment is based on market value as of the re-assessable event which is generally your purchase price of the home and if your purchase price was market value the Assessor will accept it as market value. If not, the Assessor will determine a value for you based on comparable sales of your home.

Usually, most California Residents pay close to 1.25% of their assessed value in property taxes per year. For example if your assessed value is $100,000 you would pay about $1,250 per year in property taxes. The difference between your base value and your assessed value is very simple. Your base value is the value established as of the date of a re-assessable event usually when your purchase your home. The assessed value is the amount you pay taxes on for a designated year since all base values in California have a 0-2% increase per year based on Prop 13 and the Consumer Price Index rates for inflation in a given year.

The base value is the value property taxes are based on and then it increases slightly every year. Generally, most Californians pay about 1.25% of their assessed value in actual property taxes per year. So as your base value trends every year raising your property tax value year to year, accordingly what you pay in property taxes increases. Remember the amount you pay is limited based on California Property Tax Law. So even if the market sky rockets and your market value increases substantially, your property tax base wont increase along with the market it is limited to the 2% trend based on California Property Tax Law.

About the author: Valerie Faltas has specialized in Property Taxes for the past 5 years and has produced a free report that exposes the truth about Prop 13 and Prop 8. Check out our FREE California ebook which explains Prop 13 in more depth with examples! Feel free to contact me with any questions you may have! Get your free report on Prop 8 and Prop 13 now. You have full permission to reprint this article provided this box is kept unchanged.