Terms and Concepts

Prop. 8 Assessments - Temporary Decline in Market Value Review Process

The Value Decline Review Process can seem a bit confusing. We hope this information will help you understand the process and answer any questions you may have.

Please note: The deadline to file a 2013-2014 Informal Request for Decline in Market Value Reassessment with the Assessor was June 30th, 2013. If you missed the June 30th deadline, you may protect your rights and ensure a review of the 2013 assessed value by filing a 2013-14 Assessment Appeal before November 30th, 2013

Temporary Declines in Value

We sometimes refer to the process of reviewing property as "the Prop 8 review process" because of its association with temporary declines in taxable value allowed by the passage of Proposition 8 in 1978.

If you have additional questions about the process or any letter you have received from us, or if you have other questions about how property is assessed in Sonoma County, please contact us by telephone, or email, or visit or write our offices.

Background

In 1978 Californians passed Proposition 13, amending the state constitution so that the yearly taxable value of most real property in California must be the lower of either:

The base year value is established when a property is sold, changes ownership, or undergoes new construction. If none of these has occurred since 1975, the base year value is the market value of the property as of March 1, 1975. Real property value typically increases over the years, but sometimes the fair market value of a property falls below its current adjusted base year value. Proposition 8, also passed in 1978, addresses temporary declines in value.

The law established by Proposition 8 allows the County Assessor to reduce your property taxes by enrolling a value on the Tax Roll that reflects a temporary reduction in taxable value for your property (see California's Revenue and Taxation Code, Section 51). Once reduced in this way, your property's value must be reviewed on January 1 each following year to determine whether its current market value is still less than its current adjusted base year value. When its market value increases above its adjusted base year value, the Assessor will once again enroll its adjusted base year value. Prop 8, values can change from year to year as the market fluctuates up and down, but under no circumstances does the Assessor assess your property at a value greater than it's adjusted base year value.

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How Property Values are Assessed:

California’s Proposition 13 caps the growth of a property’s assessed value at no more than 2 percent a year unless the market value of a property falls lower. When that happens, Proposition 8 passed in 1978 shortly after Proposition 13, allows the property to be temporarily reassessed at the lower value. However, as the value of the property rises, the assessed value and resulting property taxes may increase more than 2 percent a year up to the annually adjusted Proposition 13 cap.

The example below reflects a typical residential property assessment cycle. (Please review the graph below to visually see how the values are assessed.)

Visual chart representing the examples in the list text below

Three examples of properties that have undergone temporary tax relief

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Frequently Asked Questions about Value Decline (Also known as Prop 8)

Hopefully this information will answer your questions. For information about assessment appeals, please visit our Assessment Appeals page.

The new assessment on my property is higher than what I could currently sell it for. How can I get it changed?

It's important to know that California property tax law requires the assessor to value property, under Section 51 of the California Revenue and Taxation Code, as of the prior January 1st. This valuation date limits the comparable sales used to value the subject property to no later than March 30th of the same year. If you have information that supports a different market value, you may file an “Application for Changed Assessment” with the Clerk of the Assessment Appeals Board. The filing period is from July 2 to November 30. Their telephone number is (707) 565-2241.

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Can the assessed value of my property be increased after you reduced it in a prior year?

Yes it can. The Assessor is required to annually review the temporarily reduced assessments and adjust them as market conditions change. If recent sale prices of properties, (please see the time frame restriction noted above), similar to yours have increased, this must be reflected in the assessed valuation of your property as of the January 1st lien date.

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Will my property's assessed value go up next year?

The direction (up or down) of your property's assessed value depends on several factors. By law the assessor must enroll the lower of two values, the Proposition 13 “base year value factored for inflation” or the property's market value as of January 1st of each year. If the current assessed value is the Proposition 13 “base year value factored for inflation”, the assessed value will only receive an inflation adjustment next year. However, if the current assessed value is the property's “market value” as of January 1st, you may see an increase or decrease next year. The property value will be reviewed annually and adjusted up or down until the “base year value factored for inflation” is restored. Remember it's the lesser of the two values that is enrolled each year.

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I'm protected by Proposition 13. What gives you the authority to increase my value more than 2% in one year?

Proposition 13 does limit the annual increases to your property's “base year value” to 2% per year. Once your property's assessed value is reduced to reflect a Proposition 8 value, state law requires us to annually review and incrementally adjust its assessed value to reflect current market conditions until its “base year value” adjusted for inflation is restored. These incremental increases or decreases are not subject to the Proposition 13 annual inflation factor maximum of 2%, as long as the assessed value does not exceed the “base year value” plus the annual inflation factors. If your property's annual taxable value changes next year, you will be notified. Section 51 of the California Revenue and Taxation Code allows increases and decreases in value beyond 2% to the property's Proposition 8 “market value”. Again, this is allowed as long as the property's market value is less than the “base year value” factored for annual inflation.

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Can I request an informal review by your office for a past year or just the upcoming tax year?

No reviews will be done for past years. However you can request an informal review from January 1st through June 30th for the upcoming tax year only. We cannot go back and look at past years unless you had filed a formal appeal with the Clerk of the Assessment Appeals Board (AAB) for that particular year in question. An appeal needs to be filed each year if you disagree with the taxable value for a particular tax year. You may file a formal appeal with the Clerk of the Assessment Appeals Board from July 2nd through November 30th. The appeals application can be obtained at http://www.sonoma-county.org/main/assessment.htm

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I filed an assessment appeal for last year and it has not been resolved? When will it be resolved?

Due to a record level of property assessment work generated by the economic downturn, our office currently has a large backlog of assessment appeals to process. Since by law assessment appeals must be resolved within a two year time period, our office will work the appeals chronologically (First in, first out). Therefore, assessment appeals that were filed for 2011-12 will be scheduled first and the 2012-13 appeals will begin to be scheduled for hearing in October 2013. They will be processed after the other years are completed. There are approximately 1,000 unresolved appeals that must be scheduled for hearing before the 2012-2013 appeals can be scheduled. We apologize for the delay and thank you for your patience.

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If I filed an appeal last year, do I have to file another appeal this year?

Yes, in order to protect your appeal rights you should file an appeal for any given year that you feel that your property's taxable value is higher than its January 1st “Fair Market Value”. Please note that once your property's value has been temporarily reduced below its factored base year value (Proposition 13 value adjusted for inflation) our office will annually review the value. However, please realize that if you do not agree with the annual assessed value, it is best for you to file your appeal between July 2nd and November 30th.

Note: even though you may have filed an appeal in a previous year (i.e. 2012-13), it does not carry-over to the subsequent year (i.e. 2013-14). You must treat each year independently and file each year if you disagree with your value.

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What if the 2012-13 Proposition 8 taxable value is greater than my 2012 purchase price?

With a “Proposition 8” annual enrollment, the value on the annual tax roll reflects the “Fair Market Value” as of January 1, 2012. Any sales transaction that follows that date may be a different value (up or down). Your subsequent purchase has a separate date and value assigned for that transaction. Once your purchase has been worked by our office, a supplemental assessment notice will be generated to reflect a new “Fair Market Value”. If you disagree with the “Fair Market Value” on the supplemental assessment, you should file an appeal within 60 days of the supplemental notice.

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Can you certify a value for my mortgage company so that my impound accounts are based on my new purchase price?

Generally, yes the Sonoma County Tax Collector may be able to help you with this request. You may contact the Tax Collector's Office in order to request clarification on the issuance of tax bills and assistance for impound information. Contact them at (707) 565-2281 or at taxcollector@sonoma-county.org

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How can the assessed value of my property be increased after you reduced it?

The Assessor is required by law to conduct annual reviews of properties that have previously received temporary reductions in assessed value and to adjust their values as market conditions change. Selling prices of properties similar to yours have increased recently and this increase must be reflected in the assessed value of your property.

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I didn't request a reduction in value based on Proposition 8. Why are you raising my taxes now?

Temporary reductions to your property's taxable value can be initiated by either you or by the Assessor. In a declining or stagnant real estate market, the Assessor may choose not to apply the annual inflation factors (which are 2% or less) to a large number of properties. When the real estate market has fully recovered, the Assessor is required by law to restore the original base year values plus the inflation factors to all of these properties.

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If I submit an Informal Request for Decline in Market Value Reassessment, how soon will I hear back from you?

We will respond as quickly as possible, but if you have not heard back from us by November 1, we recommend that you consider filing a formal Application for Changed Assessment, which is due November 30. You should also call the Clerk of the Appeals Board at (707) 565-2241, or visit the office of the Clerk of the Appeals Board at 575 Administration Drive, Santa Rosa, California, 95403.

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The Process

Temporary reductions to your property's taxable value on the Assessment Roll can be initiated by either you or the Assessor. The process works like this:

Illustration of taxpayer requesting reviewEither you provide us with evidence that you feel justifies a reduction in your property value and request us to review it, or we initiate a review on our own. Our office constantly monitors market conditions and occasionally lowers assessed values without requests from owners.

Our appraisal staff will estimate your property's fair market value as of January 1 (the lien date) after studying applicable real estate market data. Then we compare that estimated value to the property's current adjusted Prop 13 base year value. Illustration of appraiser reviewing propertyIf the estimated fair market value is greater than the adjusted Prop 13 base year value, no change is made to your property's assessed value. But if the current fair market value is less than the adjusted Prop 13 base year value, your property's assessed value is lowered to match its fair market value; this lower assessed value will be reflected in your next tax bill. In either case, you will normally be notified by mail in early July.

Illustration of taxpayer reading results of reviewIf you feel that we have reached our decision in error, you should contact us. If after contacting us and discussing your concerns you still feel that your property's assessed value is too high, you can file an appeal with the Assessment Appeals Board. If you wish, you can download an Application for Changed Assessment (PDF: 766 kB) as well as the Board of Equalization's guide to Residential Property Assessment Appeals (PDF: 161 kB), which may provide helpful information for completing the application form. The filing period for assessment appeals is normally from July 2 to November 30.

Illustration of November 30th calendar pageWhen your property's assessed value has been temporarily lowered due to Prop 8 conditions, it must be re-examined each year. When its market value increases above its adjusted base year value, the Assessor will once again enroll its adjusted base year value.

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Examples

Here are three examples of assessments involving properties that experienced a decline in value for a temporary period of time:

Example 1: Value Reduction

This example illustrates how a property might be assessed over several years when market conditions cause its market value to fall significantly below and then rise above its adjusted base year value.

Example 2: Value Reduction with New Construction

This example illustrates how a property might be assessed over several years when new construction adds value to it even though market conditions cause its market value to fall significantly below its adjusted base year value.

Example 3: Value Reduction Because Inflation Factors Are Not Applied

This example illustrates how a property might be assessed over several years when the Assessor elects not to apply annual inflation factors to the base value established when the property is purchased.

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Important Notice:

The staff of the Clerk-Recorder-Assessor's Office are forbidden by California legal codes to practice law or provide legal advice; this prohibition includes giving advice about what forms you might need or how you should fill them out.