As Home Prices Rise, So May Your Property Taxes
The decline in the real estate market these last several years led many California homeowners to seek reductions in their property taxes. All they had to do was show the decline in market value of their homes, via a comparative market analysis, and local tax assessors were generous in granting annual reductions. BUT… now that prices are increasing, homeowners must realize that so too can their property taxes.
Normally property taxes do not increase more than 2% annually, thanks to the voter-approved Proposition 13 (also passed by voters in 1978). However, just as assessors have the authority to temporarily reduce taxes when property values go down, so can they increase taxes, even more than 2%, when the values come back up (Proposition 8, 1978).
The 2% limit outlined in Proposition 13 only takes effect when the value of the property reaches the level it would have reached had the market never dropped. There are areas in California that have already been subject to tax increases.
If you live in an area that has seen market value increases, and you have had a property tax reduction, be prepared for possible property tax increases soon. It may not be welcome news to you, but it is good news for your county and the economy to see these improvements in the housing sector.
