Why you should never ask for a property tax reassessment
NOTE: See a more recent article I posted about why this posting below is not accurate…
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From this week’s Guardian comes an article that gives me the opportunity to point out something that you as a homeowner should NEVER do.
“You see, [George] Sibthorp makes a living getting people a break on their property taxes. He drums up business by stuffing mailboxes with offers to work on a contingency basis until his clients first win back some cash from the tax collector. Judging by public records on tax assessment appeals, Sibthorp has been quite successful.”
The basis of this article is that Sibthorp will help you navigate through the city maze to have your property taxes reduced if you feel you have been over-assessed. Especially if you have paid a mint for your house, there may be times when you think that your market value may have diminshed enough to warrant a lower valuation.
I can’t over-empahsize this enough: DON’T EVER DO THIS!
You see, years ago some political geniuses created Proposition 13, which locks your property tax rate at the value when you bought your property, with very small (miniscule, really) increases over time. Nobody can touch this valuation, until you ask them to re-assess your property. If you do that ONCE, you drop your Prop 13 rights and they have the right to reassess every year for as long as you own your property.
As a hypothetical example, let’s say that you bought your house in Noe Valley in July 1989 for $250,000. In January of 1990 (post-quake) you’re feeling like you got fleeced. You’re feeling like you deserve a reassessment on your tax basis. So you call up the city (or a service like the one the Guardian describes) and have your property reassessed. They do their research and determine that your house in this post-quake economy is only worth $220,000 now. You feel like a rock star. You just saved your family hundreds of dollars per year, and your tax bill is roughly $2,500/year.
Fast-forward to 2005. That same home is now worth $1.6 million. Since you gave up your Prop 13 rights for the benefit of reassessment in 1990, they have reassessed your house each and every year and your property taxes are now $17,000/year.
See what I mean?
As a general rule, it’s always better to keep the city out of your business anyhow, but in this case, I think you get my point.
More details about the assessment process can be found on the County Assessor’s Web Site. There is nothing specific on the site about the reassessment triggering subsequent reassessments, but I have emailed them and will let you know what their official response is.
Scenario, you had an addition to you house and the city has the right to re assess your house value and the value is like 20 % over market value. Then what are you going to do.
Anonymous at June 27th, 2007 at 7:57 pm ( )THANK YOU! I have been receiving the "Sibthorp Notice" for several years now, I even talked to the SF City Assessors Office and a few real estate friends. No one told me this – NO ONE!
You just saved me a lot of money ….
Thomas Korte at July 3rd, 2009 at 2:29 am ( )Thanks.
I wonder if this would be true for a condo which you can not make any additions and there would be no reason to make an assessment by the city!
jOHN at August 12th, 2009 at 6:47 pm ( )May be true with the “reassessment” condition, but leave it to the city (government bureaucrats) to flag it every year or even regularly to watch/reassess your property after that, with all the market research that goes with that chore. In other words, chances are the incompetence and laziness of those pencil pushers will practically guarantee you won’t get a full-fledged ‘reassessement’ no matter what the market does later on, except that the stated 1 or 2 % annual per Prop 13. So property owners should go for it!!
Nightrider at July 18th, 2010 at 6:26 pm ( )