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Paying too much property tax?

As the appeals pile up, counties are revaluing homes to reflect the shift in the market.

December 09, 2007|Frank Nelson | Special to The Times

As Monday's deadline for payment of the first installment of property taxes looms, some Southern Californians may be wondering if they are paying too much on homes whose values have dropped.

This year's downturn in the number of home sales and median prices has caused widespread second-guessing on valuations, and in Orange County, for example, has generated near-record numbers of assessment appeals.

Darlene Bloom, clerk of the Orange County Board of Supervisors, said the number of residential and commercial assessment appeals has "gone up considerably" in the current tax year, which began July 2. Property owners have already lodged 9,500 appeals, mostly during the main filing period ending Sept. 15. Bloom is bracing for the largest annual tally since the property meltdown of the early 1990s.

"We expect about 13,000," she said. If she's right, that would be more than double last year's number and well clear of the previous highest total in recent times, about 9,100 in 2005-06.

Eight workshops are being organized to help Orange County homeowners prepare their appeals, Bloom said. Locations for the sessions will be chosen after the tracking of property declines by ZIP Codes, she added.

Don Ashton, administrative deputy for the executive office of the Los Angeles County Board of Supervisors, has not yet seen an increase in appeal filings, though he expects that to change next year "if things continue the way they are."

Several counties have tried to avoid the extra time and cost of handling appeals by incorporating declining values into their latest assessments, looking especially closely at more recent purchases and certain hard-hit areas.

Riverside County uses its website to draw attention to "recent housing market conditions." Those who think the assessed value of their home is greater than its current market value are guided toward the relevant appeal form.

The county's assistant assessor-clerk-recorder, Cathy Colt, reports a fairly muted response. There have been some phone calls and some appeals, she said, but "people are not breaking down the doors."

She thinks that's partly because the county has already reviewed many areas and taken into account falling property values in the 2007 assessments. Counties are able to initiate assessments on the basis of declining values as well as when a property was built, sold or improved.

These latest assessments reflect the market as of Jan. 1, and decreases in values since then have not yet been factored in. However, Colt believes there's a good chance Riverside, like many other counties, will continue being proactive and deflect potential 2008 appeals by aligning assessments with the more subdued marketplace.

In San Bernardino County, Assistant Assessor Harlow Cameron said their office is proposing an "aggressive approach" to mitigate the effects of declining values by identifying and reducing appropriate assessments.

He said the market slowdown and decline in values have taken longer to show up in San Bernardino County than some other areas; however, there has been some increase in appeal filings, and the county anticipates more next year.

As a result, Cameron said the county is looking very closely at 2005-, 2006- and 2007-based values and expects to issue reduced assessments on "many thousands of parcels."

But despite today's rocky market, the majority of homes -- including those that have experienced steep drops in value -- still are likely worth more than they are assessed for because owners have enjoyed so many years of appreciation.

Even in cases where counties are revising assessments on a broad scale because of declining values, officials say there is no way any assessment can be revised upward from the original Proposition 13 formula based on the original purchase price plus an annual inflation factor.

This means assessments in place for some years are unlikely to change now. However, owners who bought in the last year or two may find their property tax is based on a purchase price that is now higher than the home's current value.

Jim Bone, the author of three books on California property tax and a member of the Orange County Assessment Appeals Board from 1977 to 1990, estimates that 5% to 10% of homes may fall into this category.

Bone, a CPA now working as director of property taxes in the Los Angeles office of global financial services company PricewaterhouseCoopers, said it's too late for homeowners to change their latest tax assessments. The deadline for appeals was Nov. 30 in most counties.

But beginning early next year, people can file requests for informal reviews, something each county assessor is required to consider, he said. If homeowners are not satisfied with the outcome, they have the option of filing a formal assessment appeal.

Monday is the final day to pay the first property-tax installment to avoid a 10% penalty, and the second installment is due Feb. 1 and must be made by April 10 or the penalty kicks in.

Donna Doss, L.A. County assistant treasurer and tax collector, reported that payments on annual property-tax bills have been coming in steadily: "People are learning to mail earlier."

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Where to turn

Special conditions relating to assessments, and penalty-free payment extensions, apply to hundreds of property owners who suffered losses in the recent wildfires. For more information about property taxes, assessments, appeals, how to make payments and payment deadlines, contact your county treasurer-tax collector's office:

Los Angeles County: (888) 807-2111 or (213) 974-2111, lacountypropertytax.com

Orange County: (714) 834-3411, www.oc.ca.gov/treas or www.oc.ca.gov/assessor/

Riverside County: (951) 955-3900, riverside.asrclkrec.com/

San Bernardino County: (909) 387-8308, www.mytaxcollector.com

San Diego County: (877) 829-4732, www.sdcounty.ca.gov/pts/

Santa Barbara County: (805) 568-2920, www.sbtaxes.org

Ventura County: (805) 654-3744, www.ventura.org/taxcollector

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