How to Get a Lower Appraisal on Your Home

Q: I read in the paper recently that the Los Angeles County assessor’s office is reducing the appraised value of nearly a quarter of a million homes in the county. I don’t live in L.A. County, but I believe my home has declined as well. How do I get a lower appraised value and the lower property tax bill it will ultimately bring? --J.C.T.

A: First, let’s quickly run through how property tax bills are set in California.

Under the tax-limiting Proposition 13 approved by voters in 1978, homes are generally valued at their purchase price plus an automatic annual increase of no more than 2%. Even if property is declining in value, as it is today, state law allows an upward reassessment for property tax purposes if the overall cost of living in the state is rising.

Before you can successfully challenge your tax bill, you must determine that your home is worth less on the open market than the value the tax appraiser has assigned it. You cannot simply say that your home has declined in value from the previous year and therefore should not be slapped with a higher tax assessment value. It will be difficult for Southern Californians who have owned their homes for more than five years to make this case because homes were appreciating in value at a far greater rate than 2% annually five or more years ago.

However, if you purchased your home more recently, it is entirely possible that its current value is less than the value assigned it at the time of purchase plus the 2% annual increases. In fact, it is likely that your home is worth less than you paid for it. Local assessors say they are reviewing their property tax rolls and taking a fresh look at all properties that have changed hands within the last five years to find instances of over-assessment. If your property is skipped by this review, you are entitled to seek an individual evaluation.

Although the process varies somewhat from county to county, your first step, regardless of where you live, should be to contact your local county assessor’s office and ask for a so-called Proposition 8 application.

To support your case, you will be asked to provide data about the sales of three homes comparable to yours. You can usually get this information from a real estate broker, but your assessor’s office also maintains files of home sale prices. Once your application is filed, all you have to do is wait until you are notified. In most counties, these forms are due by May 15.

Local assessment officials say they are well aware that property values have fallen steeply in recent years and will make every effort to respond to your Prop. 8 application by the end of June. However, if you are not contacted--or are assigned an appraised value that you believe is too high--you are entitled to appeal the decision to the county Assessment Appeals Board. By statute, appeals can be filed only between July 2 and Sept. 15.

Further, the appeal must be filed on a specific form available only from your local assessor’s office. Once the appeal is filed, you may have to wait several months before being summoned to a hearing. At this point, you should come armed with all the information you have to support your case.

Again, you must prove that the fair market value of your property is less than the tax assessor has assigned it; it is not merely good enough to argue that in times of declining property values you should not be subject to the 2% annual escalation.

Finally, you must remember that even though you are appealing your tax bill, you must continue paying it. If you fail to pay the amount levied, you could be subject to late-payment penalties that are imposed regardless of whether or not you are challenging your bill.

And one last warning: Local assessors say there is virtually no reason for property owners to hire one of the many services now springing up to help with these forms and appeals.

In some cases, the services want half your tax savings--or more--for handling paperwork you can easily handle yourself. Even the supporting information you will need to win your case is all a matter of public record--the same tax and property transfer records on file in the county assessor’s and recorder’s offices that these services will consult on your behalf.

Remember, the purpose of filing for an assessment reduction is to save money, so there’s no point in giving it away for a service of dubious value.

Here is where to write for assessment information in each of the counties in Southern California:

* In Los Angeles County, the Office of the Assessor, 500 W. Temple St., Los Angeles 90012, or call (213) 974-3211.

* In Orange County, the County Assessor’s Office, Real Property Division, P.O. Box 149, Santa Ana 92702, or call (714) 834-2941.

* In San Diego County, the County Assessor’s Office, 1600 Pacific Hwy., Room 103, San Diego 92101, or call (619) 531-5761.

* In Riverside County, the County Assessor’s Office, County Administrative Center, P.O. Box. 12004, Riverside 92502-2204, or call (909) 275-6200 or (909) 275-6220.

* In Ventura County, the County Assessor’s Office, 800 S. Victoria Ave., Ventura 93009, or call (805) 654-2157.

* In San Bernardino County, the County Assessor’s Office, 172 W. 3rd St., San Bernardino 92415, or call (909) 387-6730.

Is an IRA Part of a Personal Estate?

Q: Is an individual retirement account part of a person’s estate or is it a separate entity? --G.F.R.

A: IRAs, life insurance policies, annuities and living trusts are considered a part of a person’s estate when it comes to determining if and how much estate tax is due.

However, because all these instruments have their own separate beneficiaries--who are listed on the documents--IRAs, life insurance policies, annuities and living trusts are not part of an estate when it comes to the probate process.