Please Note: This article is specific to California property valuation. Please check with your local property tax assessor if you live in another state.
Since the passage of Proposition 13, Californians pay property tax based on the price of the home when they bought it. Every year there after, the assessor may increase that value by the rate of inflation, but never more than 2% per year. The assessor may also increase the value if the homeowner does a major renovation or addition, but otherwise, the property tax increase is predictable from year to year.
Until recently, this has been a great deal for California homeowners. As they watched home values in their neighborhoods climb, their tax rate remained stable. But now that values have dropped throughout the state, many homeowners are complaining that their homes are worth less than what they paid.
Thanks to the passage of Proposition 8, homeowners can ask for a temporary reduction in their valuation. If you have owned your home for many years, even in this real estate downturn, your assessment may still be below current market value. But for people who bought in the past few years, the assessed value as reflected on their 2009-2010 tax bill may be too high.
Starting July 2, if you think the market value of your home as of January 1, 2009, is less than its assessed value for 2009-10, you may ask the assessor to revise it downward. Depending on the county in which your property is located, you have until September 15 or November 30 to file a formal appeal.
If you want to have your assessment revised, go to your county property assessor's website. There you should find information on filing an appeal. Sometimes the assessor will ask for data to back up your claim of decreased valuation. Ask your local Realtor for assistance in providing this information. Beware of companies who offer to file the appeal for a fee. The process is simple and there is no need to pay a third party.
If you do get a reduction, remember that it is temporary. Every January 1, the assessor will review your home value to see if it has increased. If the housing market bounces back, your assessed value could go up by more than 2% a year, but it can never go higher than it would have been if you had never received the temporary reduction.