Properties suffering a decline in market value are discovered by:
- An owner providing the Assessor with data to support a lower value.
- The Assessor may initiate the Prop 8 review.
- The Assessor's Office constantly monitors real estate market conditions and lowers assessed values on a mass basis.
It is important to note that although the market values of all properties may suffer a significant decline during a recession, not all will qualify for a Prop 8 reduction.
The current market value must fall below the Prop 13 factored base year value (assessed value) before the Assessor can recognize the decline.
Prop 8 values can change from year to year as the market fluctuates. When a property is in Prop 8 status, its assessed value may decrease or increase more than 2% per year. The Prop 13 base year values suspended by Prop 8 values continue to increase by an annual inflation factor of no more than 2% per year.
When the market value of the Prop 8 property increases above its Prop 13 factored value, the Assessor will once again enroll its Prop 13 factored value. The assessed value of any property will never exceed that property’s Prop 13 factored value.
Chart: How Property Values Are Assessed
Assessed Value Look-up
The Prop 8 Process is as follows:
Appraisal staff reviews market data, estimates the property’s market value as of January 1st, and compares this market value to the property’s current Prop 13 factored base year value.
If the January 1 market
value is below factored Prop 13 value, then:
- Assessed value is lowered to market value for next fiscal year.
- Owner is notified of reduced value.
- New tax bill is based on lower value for next fiscal year.
- The following year, Assessor repeats process and enrolls the January 1 market value at that time or Prop 13 factored value, whichever is lower.
If the January 1 market
value is higher than factored Prop 13 value, then:
- No change in assessed value is made.
- Owner is notified that value will not be reduced.
- If owner still feels value should be reduced, then owner may file an assessment appeal with the Assessment Appeals Board, from July 2 - November 30* each year. *If November 30 falls on a Saturday or Sunday, mail postmarked on the next business day shall be deemed on time. Please visit the
Assessment Appeals Board web site for exact filing dates in any given year.
- Appeals Board hears evidence from owner and Assessor; the Board then determines proper assessed value.
Following are examples of how the Assessor processes declines in value.
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Examples of Assessments Involving Properties Declining in Value:
Example 1
Home purchased January 2005, for $400,000 and assessed with $400,000 base year value.
On
January 1, 2006, factored base year (assessed) value is $408,000 ($400,000 +2% inflation) but market value has declined to $300,000.
Action: Assessor reduces assessed value to $300,000 for 2006-2007 assessment roll.
On
January 1, 2007, the home’s value continues to decline and is now $280,000, while its factored base year value has risen to $416,160 ($400,000 +2% inflation compounded for 2 years).
Action: Assessor reduces assessed value to $280,000 for 2007-2008 assessment roll.
On
January 1, 2008, the homes market value increases to $350,000 while its factored base year value rises to $424,483 ($400,000 +2% inflation compounded for 3 years).
Action: Assessor raises assessed value to $350,000 for 2008-2009 assessment roll.
On
January 1, 2009, the home’s market value increases to $450,000 while its factored base year value rises to $432,972 ($400,000 +2% inflation compounded for 4 years).
Action: Assessor reinstates factored base year value of $432,972 for the 2009-10 assessment roll.
Example 2
Home is purchased in 1986 for $130,000.
On January 1,
2005, the current market value of the home has risen to $300,000 well above its Prop 13 factored base year value of $185,713 ($130,000 + 2% inflation compounded for 19 years).
For January 1,
2006, the market value falls to $200,000. This is still above the Prop13 factored base year value of $189,427 ($130,000 + 2% inflation compounded for 20 years).
No Prop 8 reduction is granted for the 2006-2007 assessment year, even though the property has lost $100,000 in value over the last year. The factored base year value ($189,427) is still less than the market value ($200,000).
It is important to understand that Prop 8 reductions are not permanent and may decrease or increase more than 2% from year to year. Also, Prop 13 base year values suspended by Prop 8 values continue to increase by an annual inflation factor of no more than 2% per year.
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If you have other questions about the Decline in Value Prop 8 process, please call the Assessor’s Office at (916) 875-0700, between 8 A.M. and 4 P.M., Monday through Friday, email us at
assessor@saccounty.gov, or visit the Duty Appraiser in person at 3636 American River Drive, Suite 200, Sacramento, CA 95864-5952, between 8 A.M. and 5 P.M., Monday through Friday.
