Wednesday, August 24, 2011

Sacramento: When estate vaues rise again, tax bills liely to rise faster

When real estate values rise again, tax bills likely to rise faster

Published: Tuesday, Aug. 23, 2011 - 12:00 am | Page 1B

Hundreds of thousands of Sacramento-area residents have experienced one upside of falling real estate prices: lower property taxes.
When the market recovers, however, their tax bills could rise much faster than they fell.
That's because the normal limits on tax increases established by Proposition 13 no longer apply as long as a property's assessment remains below its maximum taxable value, generally its last sales price plus annual inflation.
In good times, Proposition 13 allows the assessed value of a property to rise by no more than 2 percent a year – even though the actual market value may have gone up much more. There are no such limits on properties worth less than taxable value.
How much could taxes rise?
That's not a question people are in hurry to ask. Home prices in the region are about 50 percent below the peak of 2006, and most resales in the Sacramento market are bank-owned or short sales. Recovery still seems out of reach.
Real estate sales data so far signal that property taxes will likely go down again, or remain flat, for the 2012 tax cycle, said John Solie, assistant assessor for Sacramento County.
When taxes do rise later this decade, the shock to owners will depend on the pace of recovery. In a slow upswing, owners might not notice, at least, not right away.
Over time, however, the shift to higher taxes is likely to produce a slew of appeals, assessors say.
"After the last recession we were going into a real estate market that was increasing 10 to 20 percent a year," Yolo County Assessor Joel Butler said. "People really felt it, and they talked to us about it.
"This recession is so different than anything we've ever experienced. I don't see us coming out like a lion, as we did last time."
In the 1990s, when the real estate market took a long dive, nearly a third of all Sacramento County properties had lowered assessments.
This time, the share exceeds 40 percent in Sacramento County, and it's still climbing.
Already in the four-county region – Sacramento, Yolo, Placer and El Dorado – the volume of reduced-tax properties exceeds 300,000.
"This is pretty unprecedented for property taxation since Proposition 13 passed, in any number of ways," said El Dorado County Assessor Karl Weiland.
"We've had three (significant) years of negative values," he said. "That has never happened."
Weiland said he believes assessors will take a conservative approach in restoring taxable values.
"This has been a topic of discussion among all assessors," Weiland said. "We're simply trying to formulate some idea as to how we're going to deal with this.
"Everybody is scratching their heads and saying, 'OK, we've dealt with the decrease in values, and we've followed the market down. Now we've got to figure out how we follow the market up."

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If you live in the Greater Sacramento and surrounding areas, and would like a current estimate of value on your property, email us with your address, and we will be happy to send you copy based on Metrolist.  (same stats that appraisers use)

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