By Jeff Prang
Los Angeles County Assessor
There’s a lot of acronyms at play here but when you untangle the letters, you just might get a tax savings that’s oftentimes overlooked.
Let me explain: COVID-19 ramifications are everywhere and the value of property is no exception. And it’s directly related to the pandemic.
I’m talking about what is called a Decline-in-Value for property, otherwise known as Prop. 8. Simply put: A Decline-in-Value or DIV as it’s more commonly called, allows a property owner to formally disagree with their property value and ask for a lower, corresponding property tax.
By law, the assessor is required to enroll the lesser of a property‘s base-year value or its current market value. Again, property values are established on Jan. 1 of each year, the lien date and that’s the time we base our analysis. The pandemic did not affect the economy until late February/early March and so property owners will not be able to assess the DIV until probably Jan. 1 of 2021, not this year.
I know that this can be somewhat confusing, which is why I’ve been addressing the issue in every speech I give to community organizations. Homeowners may file for the DIV this year and because the lien date of Jan. 1, 2020 does not reflect a decrease in a home’s value, there may not be an adjustment.
However, as Jan.1, 2021, comes around and the pandemic has been battering the economy hard, there is most likely going to be a decrease in value. That’s the time to file for the DIV.
You can file an application from July 2 through November 30. Moreover, we will aggressively be looking at the values of property as well to ensure homeowners receive the warranted reduction in property taxes.
Now remember that the reduction of value is only temporary until the market recovers. As of now, it appears as if real estate is keeping up with the current market while commercial/industrial is looking a bit shaky.
Frequently asked questions:
How do I get a Decline-In-Value assessment?
You must file a Decline-in-Value Review Application, form RP-87, with the Office of the Assessor between July 2 and November 30. Applications are valid if postmarked by November 30. If November 30 falls on a Saturday, Sunday, or a legal holiday, an application is valid if either filed or postmarked by the next business day. On your claim form, provide the Assessor with information that supports your opinion that the market value for your property is less than the assessed value. The best supporting documentation is information on sales of comparable properties.
What is a comparable sale?
A property sold with features that are similar to your property is a comparable sale. Comparable sales information helps you analyze the value of your home. For example a property similar in location, zoning, size, number of bedrooms and bathrooms, age, quality and condition to yours that sold in the open market is a comparable sale.
Where can I find comparable sales information?
A good place to start is online. The Assessor’s website, assessor.lacounty.gov, offers sales information for properties that have sold within the last two years. The same information is available from any Assessor District Office. Also, many websites offer sales information free of charge. A local real estate agent or title agent can also be a valuable source of information.
If my assessed value is reduced, how long will it last?
Decline-in-Value reassessments are not permanent, but last at least one year. The assessed value may decrease or increase depending on the market value of your property on January 1 of each subsequent year. Your assessed value will never increase more than the trended base value.
Do properties other than single family residences qualify?
Yes. All real property qualifies.
Los Angeles County Assessor Jeff Prang has been in office since 2014. Upon taking office, Prang implemented sweeping reforms to ensure that the strictest ethical guidelines rooted in fairness, accuracy and integrity would be adhered to in his office, which is the largest office of its kind in the nation with 1,400 employees and provides the foundation for a property tax system that generates $17 billion annually. .