Mike’s Real Estate Show

Proposition 8 which allows for a reduction of your property taxes due to market values going DOWN. This is a nightmare for every county government budget! This is happening throughout the state with the major areas being Sacramento, Fresno, Modesto, Stockton and many, many other communities. Here in Sonoma County I have seen property values drop 30-50% over prices sold in 2004,2005. But here’s the issue–you have to get the County to re-appraise your property and get your valuation down. They have rules for this.  The biggie is they need to see a major downward “trend” in your neighborhood. We have areas of the Southwest/Northwest of Santa Rosa which took major hits and are ground zero for foreclosure activity. The assessor is finally acknowledging this and is accepting the wide price adjustments. However, one foreclosure on the Eastside in a neighborhood will NOT be used as a comparable for the assessor in re-appraising a property. You need to show a thread of sales at lesser prices than the subject property.
  Also, the reevaluation is set January 1st. So if you try to get a re-appraisal now it won’t be happening. Wait until after January 1st and then use this year comps. Now here’s a caveat and an example of the downsize of Prop:
    If your property had an original valuation of $600,000 and you got a re-evaluation to $500,000, your property taxes will be $5,000 per year. However, the old $600,000 remains in effect for the yearly 2% increase as per Prop. 13. So even though you’re paying $5,000 yearly in prop. taxes your old rate is still being adjusted every year. What’s the big deal? Once you’ve accepted a re-evaluation to the lower tax rate, your taxes can be adjusted upwards to the original tax rate ANY TIME IT IS WARRANTED by the assessor. Not 2% a year but right up to the old TAX RATE!! So you need to be careful as you could get hit with a whammy of a tax bill when the market recovers (god only knows when that will be!!).
  Also, don’t forget prop. 60 and 90. These two propositions allow inter-county transfer of your old property tax rate (if the county is a cooperating entity–only 9 counties left who do this!) and the other allows a once in a life time, senior, to take their old tax base and move it within the county subject to certain price  and time restraints. You can Google both of these or call the County Assessor in your area.
  I think this is an obligation, albeit not pleasant one, of all of us to give our client’s the ability to lower the property tax rate. Another reason to touch them. 

OVER 55? CALIFORNIA PROPERTY TAX RELIEF
Since its passage, Proposition 13 prohibits property tax increases until property ownership is changed.
If either spouse is over age 55 (when the old home is sold), PROP 60 allows replacement of a primary residence with a new home of equal or lesser value (but see below) within the same county and transfer of the Prop 13 assessed valuation from the old home to the new property.  This is allowed once in your lifetime, and a spouse who has done it before ‘taints’ both spouses.
PROP 90 allows counties to elect to accept transfers of Prop 13 values for moves from other counties when a primary residence is replaced with a less expensive (but see below) home. If you are over 55 and move into a county which accepts Prop 90, you may take your old, lower Prop 13 value, regardless of from which county you move.
Using Prop 90, you can sell your $400,000 San Francisco home [assessed value $80,000] and move to a new $300,000 home in San Mateo; the new San Mateo assessed value will be $80,000!
7 COUNTIES WHICH ACCEPT PROP 90 (Current as of 6/1/2005)
Alameda,  Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura. [Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey, and Marin have dropped out of the Prop 90 program.]
Props 60 and 90 apply if you “trade down” (i.e. the new home costs less than the sales price of the old home). 
   If you buy New Home 1st; then sell the Old Home, you must go down in price.
   If you sell the Old Home1st; then buy the New Home: 
•         In 1st 365 days after the sale of Old Home, you may go up 5% in the purchase price of New Home.
•         If you buy New Home more than 1 year from the sale of Old Home, but less than 2 years, you may go up 10%.
Some buyers can pay the commission outside of escrow to lower to sales price.  Example:  I sold for $100,000 and then want to buy next week for $120,000.  The seller will owe a commission of $7,200. The seller will owe $2,800 of other expenses
I sold 1st so I must buy for no more than $105,000.  If I pay the seller’s expenses of $10,000, the price is down to $110,000.  Hmm.  If I buy the stove, refrigerator, and lawn furniture for $6,000, it looks like I qualify.  WARNING:  I do not suggest this is a valid idea.