Mike’s Real Estate Show

In Sonoma County, California we  now have an interesting twist on determining the property tax rate. The 1% of the sales price as per Proposition 13 has been the norm and it is NOT a complicated system. You pay $500,000 for a rural property and your yearly taxes will be $5,000 per year. But this is being challenged as prices fall dramatically in some areas due to “Short-Sales” and the huge inventory of REO’s, our Tax Collector here in Sonoma County is NOT allowing some of these “steal deals” as they feel they are not valid sales between a willing buyer, willing seller but were closed under financial distress and duress. So if a consumer gets a screaming deal of say, $300,000 on a home that last year market value equaled $400,000, the Assessor is NOT allowing 1% of the $300,000 but is fiddling with the tax base and adjusting HIGHER.
  When you buy here in California you’ll usually get a “supplemental bill” after you close escrow as the old taxes always went up! But this trend reversed this. We are also seeing more and more use of Proposition 8 (we do Propositions a lot here in the greatest State of California!!) which allows for re-assessment of your tax base. But the County Assessor is being stingy on this one!!! You’ve got to be consistent and if you’re in an area rife with foreclosure activities they most likely will NOT allow you to re-assess. Also in our state we have special assessment areas which can be “bonds” paying back road construction and all sorts of developer paid civic improvements. I sold a property in an upscale community here in Sonoma County and not only did the buyers tax base go up thanks to Proposition 13 (It is called the “stay put initiative” as when you move your taxes  go up!) but they had a special road assessment PLUS a homeowners dues common area maintenance fee. The client was paying cash for the property. Just to live there free and clear his combined tax, assessment and HOE fees was close to $1500.00/month!!