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If you are a homeowner with a tract home or typical single family residence, here it is: the step by step summary to getting your property taxes reduced. Free. You don’t have to pay an agent or consultant or attorney. You simply must follow these steps. But first a quick Proposition 13 Primer.

Simply stated, Proposition 13 provides that when a homeowner purchases his or her property, under normal conditions, it is presumed that the purchase price shall be the fair market value or the assessed value for property tax purposes. This beginning value is called the “base year value.” Prop 13 goes on to say that each year the Assessor can raise that base year value by no more than 2%. That’s great news for markets like we had in 2004 and 2005 as your property values were limited to 2% increases even if you had a 10% increase in value. So far so good.

But then something strange happened: the real estate market went backwards and home prices fell. For the first time people were stuck with assessed values higher than their home was actually worth. To remedy this problem Proposition 8 was passed which, simply stated, allowed the Assessor to reduce the value in any year that the actual value of the property fell below the value on the assessment roll. This was intended to provide temporary relief for the property owner as the Assessor retained the right to raise the value in any year that the fair market value exceeded the value on the roll up to it’s factored base year value (the value that would have been on the roll had no reduction been given).

Let me restate all that simply. If, on January 1, 2010 your home was worth less than your 2009 tax value plus 2%, you have the right to ask for a reduction. But it will be temporary, and will be put back to normal when values increase. So much for the primer. Let’s get on with the process.

Assuming you have reason to believe your assessed value is higher than your market value, the next step is to go to your local office of the Assessor in your county to get information. There are 58 counties in California and I’m here to tell you they all are run differently. But no matter; just go and ask for the details of the Prop 8 reduction. At this point in the year there will likely be the need to do one of two things: file an Informal Prop 8 Request for Review or, if they are too busy or just don’t want to help, file a Formal Appeal.

The informal request is simply that. You are requesting they take a look at your property. Some counties have a form and require a few comparable properties. Others simply log your request. Still others won’t give you the time of day and you will have to take the next step.

Whatever happens at this point you must understand one very important thing. In most counties you only have a short window to file your formal appeal. For us it’s July 2 to November 30. Be sure to find out what the deadline is for your property. Once the deadline passes and your application is not postmarked on or before that day, you lose your rights to protest the value and you will overpay your taxes until the next year. At this time of the year I would suggest you file the formal appeal right now regardless of whether the appraiser at the Office of the Assessor tells you he or she will take a look at your property. You can always withdraw the appeal if you should reach a suitable value. Simply ask for the appeals form while you are at the office or go online as many counties now feature online forms.

Please take note that you must fill out the form carefully. Again, every county is different and they are not user friendly. You should always ask for help from the Office of the Assessor or local Clerk of the Board with anything you do not fully understand. If you fill it out wrong it will be returned to you. Be very careful to return it immediately once you have corrected the problem. Remember, at every turn there are procedures and deadlines. As a do it yourself tax agent you have the responsibility to do it right - or lose.

A word at this point about values. Whatever your assessed value is, put down no more than half for your opinion of value. Again, you can always adjust the value up at the hearing but you can not ask for a lower value than is on your appeal.

Once filed the county has two years from the date of filing to hear your case. You must pay your property taxes during this time based on the full value you are contesting. If you do not pay you possibly will incur penalties and interest. Do not take that chance. If you win your overpayment will be refunded to you along with interest-if you request it! Now, don’t just sit and wait. Come January 1, 2009 (or the next business day) go directly to your Office of the Assessor and start the process over for the 2009 fiscal year. It’s entirely possible you will have several years of appeals filed and awaiting a hearing date. If you are not successful talking informally or filing an informal Proposition 8 Request for Review you will need to file another formal appeal. That will keep on happening each year for as long as necessary.

Once you are in the queue it is all about waiting. But remember. Two years from the date of your filing if you haven’t signed an extension and your case has not been heard…YOU WIN! Whatever value you wrote on the appeal is the value for the year under appeal. I have won several cases this way. Be aware of the filing date and never sign an extension without first checking the dates.