Notices of valuation are mailed by the County Assessor annually to notify property owners of the taxable values of their properties as of January 1. The assessed value of a property is used to calculate the amount of property taxes due for the upcoming year.
Value notices are mailed to property owners when the assessed value of property changes, such as when property changes ownership, undergoes new construction or is in decline-in-value status. Notices are not sent when the value change is merely the result of the annual inflation adjustment mandated by the state.
Value notices printed on blue postcards are sent to owners of properties that are in decline-in-value status. The total taxable value is indicative of the market value of the property. Property owners can calculate the amount of the tax break they are receiving by subtracting the taxable value from the indexed base year value printed in the upper right corner of the notice. The indexed base year value represents the maximum taxable value of the property by law.
If you disagree with your assessment, contact the Assessor’s Office to discuss the valuation. If you are unable to reach an agreement with the Assessor, you may wish to file an assessment appeal.
Compare the total taxable value with your tax bill from the prior year.
Does the total taxable value exceed the fair market value of the your property? If so, contact the Assessor's Office and request a value review be performed.
Did the taxable value increase by more than two percent over the value from the previous year? If so, your property may be in decline-in-value status, and its value has been updated by the Assessor to reflect current market value. The two-percent limit to annual value increases under Proposition 13 does not apply to market value assessments under Proposition 8.
If your taxable value increased more than two percent and your property is not in decline-in-value status, it is possible your assessment was increased to reflect construction that is in progress. Contact the Assessor's Office for more information.
Prop. 13 vs. Prop. 8 valuation:
Proposition 13 (Prop. 13) limits annual property tax increases to two percent per year. When the market value of a property is less than its Prop. 13 assessment, Proposition 8 (Prop. 8) allows for temporary tax relief based on current market value as of Jan. 1.
However, when the market value rises, the assessment is permitted to rise more than two percent.
In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when real property suffers a decline in value. A decline in value occurs when the current market value of real property is less than the current adjusted base year value (i.e., Prop. 13 value) as of January 1.
A decline in value may be the result of changes in the real estate market, the neighborhood or the property itself. When a property’s market value exceeds its adjusted base year value, the Assessor must return the taxable value to its adjusted base year value.
Prop. 8 assessments can be the outcome of assessment appeals, informal petitions to the Assessor or Assessor initiated reviews.
Temporary decline in taxable value
Real property is typically assessed at the lesser of two values:
Adjusted base year value pursuant to Prop. 13 (most often the purchase price adjusted annually for inflation, not to exceed 2% per year)
Current market value on January 1 pursuant to Prop. 8.
When a property is in decline-in-value status, the assessment is subject to annual review by the Assessor's appraisal division. As the real estate market fluctuates from year to year, either positively or negatively, so can the assessments of properties being assessed at market value.
For example, an assessed value may:
Decrease based on current market data, such as comparable sales, rents and capitalization rates.
Increase based on current market data, but not more than the adjusted base year value (Prop. 13).
Maintain the assessed value from the prior year.
Be restored to its current adjusted base year value.
Prop. 8 values may increase more than two percent
Some real property assessments in decline-in-value status may increase as the real estate market increases, possibly exceeding the two-percent limit under Prop. 13. Although Prop. 13 expressly limits annual increases of adjusted base year values to no more than two percent, there is no limitation on annual increases of real property assessments that are in decline-in-value status. However, when the market value of real property on January 1 is determined to be greater than the property's adjusted base year value, the adjusted base year value becomes the new taxable value for the upcoming roll year, effectively terminating the decline-in-value status of the property.
On June 6, 1978, California voters overwhelmingly approved Proposition 13, a property tax limitation initiative. This amendment to California’s Constitution was the taxpayers’ collective response to dramatic increases in property taxes. Prior to 1978, real property was appraised cyclically, with no more than a five-year interval between reassessments, keeping assessed values at or near current market value levels.
Prop. 13 created an acquisition-based tax system which limits the annual assessment growth of real property to two percent or the rate of inflation, whichever is lower. Taxable values of real property are established or modified only when taxable property is sold or newly constructed. As a result, two identical properties can have different assessed values depending on when they were purchased. These restrictions allow property taxes to be predictable for owners of real estate and for entities that rely on tax dollars for funding.
Prop. 13:
Rolled back local real estate assessments to 1975 market value levels.
Set the maximum tax rate at one percent of a property’s market value at the time of acquisition, with an allowance that the rate may exceed one percent to repay voter-approved debt, such as local school and hospital bonds.
Adjusts taxable values for inflation, but limits the annual increase to no more than two percent per year.
Provides that property is reassessed when there is new construction or change of ownership.
Requires a vote of at least two-thirds of the State Legislature for approval of new state taxes, and support of at least two-thirds of local voters for approval of local taxes earmarked for special purposes.
