California Assessment Appeals for Fiscal Year 2022-23

By Ken Sullivan, Principal RPC Property Tax Advisors

Fact Source: California State Board of Equalization

California Property Tax Assessment Appeal Applications are expected to increase significantly as the 2022 assessment appeal filing deadline rapidly approaches.

As the real estate market enters what appears to be a recessionary period and following a pattern of past down turns, market values for commercial and income properties stagnate then turn downward. Falling rents, increased vacancies, rising interest rates, remote workers, decreased consumer demand, property repurposing, obsolescence, rising Capitalization rates and falling Net Operating Incomes are a few reasons for a decrease in property values.

At the same time, In California due to the 1978 landmark Proposition 13 property tax law, County assessed values continue to increase by 2% a year, regardless of a downward turn in real estate market values.

Soon assessed values exceed actual market values.

When Proposition 13 became law, a little know Proposition 8 was passed and became CA Revenue and Tax code Section 51. Proposition 8 allows for a temporary reduction in value on an annual basis, should the properties assessed value exceed current market value. (See chart below)

One must complete an assessment appeal application and filed it with the appropriate County prior to that counties Assessment Appeal Filing Deadline.

Should a taxpayer miss the filing period, all current year assessment reductions resulting in property tax refunds are lost forever.

Filing periods in all California counties begins July 2nd annually and ends either September 15th or November 30th depending on the county.

Property taxes are one of a property owners largest reoccurring expense.

Best Practice is to review your tax assessments annually to determine if an appeal and a temporary reduction of your assessed values is appropriate.