December Newsletter

Hello Friends!

The holidays are approaching it seems so quickly! Before the elections it felt like the whole country was holding its breath and since they have passed it seems like time is flying! Aren't you all excited to see what changes will come along with the entire change it took to elect our new President?Although, everywhere doom and gloom is predicted and everyone is clutching tightly to what we know and what we have great opportunities exist in every type of economy and there are certainly plenty in this one!

I hope you all have taken advantage of the information offered at http://www.propertytaxlittleblackbook.com! There are many articles posted on different aspects of property taxes in California and I would love to receive your feedback and questions on any of the articles posted! I have taken the time to articulate different aspects of the law and hope that will help all of you understand how and why you are paying the thousands you may be paying to the state!

*STORY OF THE MONTH*
I have a friend who called me because she wanted to have the records on her property reflect a duplex instead of a single family home, however she wasn't sure if the second unit on her property was permitted or not and did not want to get in trouble with the city! She was very nervous however changing the record to a duplex meant she would be able to add over $100,000 in value and refinance her property. I explained to her that the city and the county assessor (which handles official building records) are two very different entities that don't really communicate with each other. The Assessor which creates records isn't concerned with what is legal or not, they are simply concerned with market value. So the Assessor wants the record to be accurate about what is on the property, because often when illegal structures can still add value. Even if the Assessor updates the record to show what is on a property it doesn't trigger the city inspector. The records are very separate! Unless your neighbor reports you, the Assessor doesn't trigger anything to have your property records updated as long as you didn't actually build... then you may trigger a reassessment. To simply have your square footage updated or bedroom count or something else that was already there when you bought the property is very easy! Just call the Assessor and tell them and ask them to update your record and make sure they know it was done before you bought it! Not the city, the county Assessor and your official building records will be corrected! All without having to deal with the city!

I know property taxes are not the most entertaining subject, however ALWAYS remember that knowledge is power and understanding has its many advantages. My vision is for all of you to understand and make the most of the law so that you can save the most! I look forward to your feedback! Feel free to post comments up on my website! Ask any questions regarding assessments, property taxes, permits, etc that you may have!

Take care,
Valerie Faltas

Property Tax Expert

What are Special Assessments and or Direct Assessments?

Depending on the area your property is located, there may be charges necessary to pay off any voter-approved general obligation bonds or other indebtedness, special assessments, or direct levies. Typically, such indebtedness results in a small fraction of a percent increase in the tax rate.

Direct taxes are levied on the tax bill by the county tax collector on behalf of the local levying agency or district, not on behalf of the assessor, auditor-controller, and/or the county tax collector divisions. For more information, or if you disagree with a special assessment levied against your property, you must contact the district directly. However, you cannot refuse to pay your tax bill that contains the direct levy amount, even if the direct levy amount is under dispute.

An example of what would cause a direct assessment is installing a sewage system, near where I live in Pasadena many of the older homes used septic tanks and the city decided to require the homeowners to be linked to a sewer system. Since the city is not usually budgeted for projects like this the cost of the sewer system gets billed to the homeowner through a direct assessment which you will end up paying in addition to your regular property taxes. The things you need to pay for via a direct or special assessment do benefit you in some way!

What are Mellow-Roos Taxes?

When Proposition 13 passed in 1978, it severely limited the ability of local governments to use property taxes to construct public facilities and services. Consequently, Californians were forced to find new ways to fund public improvements in their communities such as roads, schools, etc. The Mello-Roos Community Facilities Act of 1982 was enacted by the California legislature, the Act enabled “Community Facilities Districts” (CFD’s) to be established by local government agencies as a means of obtaining this crucial community funding. The amount of Mellow-Roos Taxes varies from one CFD to another. Typically, an adopted formula that relates to the size of the home (square footage or lot size) is used to determine the amount of an individual assessment. In general, the special taxes and assessments do not exceed 1% to 1.5% of the market value of new homes. Additionally, the total amount of all annual taxes (including property tax) usually does not exceed 2% to 2.5% of the home’s market value. Most often Mellow-Roos Taxes are applied to newly built communities such as large scale Planned Unit Development (PUD) Communities where there have been thousands of new homes built at once and the taxes are needed to establish the city services. Before purchasing a property with Mellow-Roos you will be informed either in the initial negotiation stages or during escrow that these taxes apply.

What is the difference between the Tax Collector, the Assessor and the Auditor-Controller?

These three departments handle different aspects of your property taxes although some counties merge these because they are smaller and don’t have a need for three separate departments. The triggers for re-assessable events are sent to the Assessor’s Office from the County Recorder’s Office where deeds are recorded and also from the local cities and/or county for building permit information. Everything begins with the Assessor’s Office, first in determining what is assessable and then handling the valuation of that assessable event. When something is determined to be assessable it goes through a process within the Assessor’s Office to determine the value for that particular event. At the end of the fiscal year all of the values for the year are sent to the Auditor-Controller who applies the correct tax rate to each property which varies in each tax rate area and determines the actual dollar amount owed. The tax rate is usually a percentage of the value determined by the Assessor. Additionally, if in a particular tax rate area there is a special assessment or other types of taxes such as direct assessments they get added on by the Auditor-Controller. Then finally that information is sent to the Tax Collector who sends out the bills, collects the money and deposits it into the County Treasury. These three departments make up the property tax branch of your local county government and each handle their responsibilities separately.

For example if you found out you had a lien or delinquent taxes on your property that were due, you would need to go to the Tax Collector to pay them and have the lien removed and the records brought up to date. However, if you had an issue with the amount of taxes or the value in which your taxes are based on you would need to contact the Assessor’s Office because that is what the Assessor is responsible for. Then once the value is adjusted by the Assessor it would get sent to the Auditor-Controller who would adjust the actual dollar amount owed who would then forward that value to the Tax Collector where you would receive your adjusted bill. Generally the two offices that handle public service are the Assessor and the Tax Collector, the Auditor-Controller is like the silent partner. Generally, any public service issues needed to be resolved with the Auditor-Controller is requested by the Assessor.

Provided this intricate process sometimes values are adjusted by the Assessor and somehow the actual bills sent out by the Tax Collector are not corrected. This happens when the Auditor-Controller, for whatever reason has not adjusted the right bill or there was some sort of processing error. When this happens a special request needs to be sent by the Assessor to have a particular value adjusted and then that will be forwarded to the Tax Collector who will issue a correct bill.

Why should I be agreeable when dealing with the Assessor’s Office, when they have made major mistakes?

This is a very simple question to answer…because they are handling your ASSESSMENT! Errors are made often because there is so much work and so many numbers to process! If there is a mistake in your record or a value that is far above what it should be, it is never intentional nor is it personal. The employees of the Assessor’s Office can make your life very easy and they can also make it difficult. If you are difficult to deal with, no one is going to want to help you, even if the mistake is the Assessor’s fault. The employees do not enjoy being treated as individuals who are out to get you, because they really aren’t. The employees are unaffected by your taxes, records and values, so be pleasant. Be someone they want to help so that you will get the maximum advantage of what may be available to you.

When I worked for the Assessor’s Office I had doors slammed in my face, I had homeowners and business owners yell at me. I was also treated as if I had no knowledge of the law or even appraisal and I was definitely not inclined to assist those who treated me that way. The employees you deal with who work for the Assessor, influence your property tax value and records, always remember that! Most of them have worked with thousands of property owners and can read you like a book, so be kind and patient and realize they are not out to get you. The employees are simply doing their job and being angry and patronizing will not get you the result you are looking for. You may be surprised at what being kind and patient will get you.

What is the difference between Building and Safety and the Assessor? Don’t they all have the same records?

While I worked for the Assessor and as I speak to people who own homes or other types of property I have observed a misconception in the different levels of government and who owns or does what…so let’s get clarity! There are several levels of government the largest being the federal government, then there is state then county then city. The city and county are two completely separate entities, which communicate with each other however on a day to day basis they do not share any of the same records.

The city is generally where you would go to obtain permits, zoning and planning information. The records kept on file vary city to city, some keep building information some don’t. The city really has no need for this in the long term other than to verify what may or may not be legal on a property. The confusion may arise for those individuals who own property in unincorporated area since by default they would need to go to the county department of public works which is essentially their city. Since the area has not been incorporated by a city yet, the county is the city for that area however again, the department of public works is a completely separate department and does not have the same records as the Assessor and functions independently.

The Assessor will have access to the records from the city or county and vice versa. So the records kept by your city in regards to the structure on your property pertain more to permits, zoning and planning whereas the Assessor keeps diagrams and description so that the market value of your property may be determined should there be a re-assessable event on your property. Sometimes the city and county will cross reference each other for information when needed however this is not automatic. When you need your square footage updated or use type updated, generally it is the Assessor’s records that need to be changed.

The records for my property are not correct, what should I do?

Often the Assessor’s building records are not correct because the Assessor is a mass appraisal organization and either the work was done too quickly, or the information changed or there was information that slipped through the cracks and was never processed. For every property there is a building record on file which includes a diagram of the shell of the structure and a description. From the diagram the square footage of the building is calculated and the description will include the type of property, the use type, and any other information that may be relevant to the property. These are the records that most real estate transactions are based on even though the Assessor makes no representation of having complete information for valuation purposes. The information is meant for assessment purposes only, however in reality it is the practice of real estate officials to use the information as official for purchases, sales, and other transactions.

When the records for your property are incorrect it is very simple to change and/or update them. Simply contact your county Assessor’s Office via the internet or phone and ask to have the records updated. Within the Assessor’s Office this is called a public service request and will be forwarded to an appraiser who will either speak to you and/or make an appointment to visit the property to measure or see what the differences are and then make the adjustments accordingly. This is a very simple process and can easily be handled. If there is an addition to your property that you constructed and was never assessed for this could result in an increase in your tax base however, if the error is the Assessor’s error the statute of limitations states that you will only be assessed four years in back taxes. However, if the changes were done before you purchased the property then it is considered to be maintenance before transfer and since you purchased the property with the construction there, no assessment would be added. The reason for this is because you paid for what you have and so there really has been no increase in value as opposed to if you added then there is an increase in the value. The Assessor may ask for information pertaining to the permit or documentation as to what the property was when you received it such as the listing however this will vary case to case. Often, the Assessor will go off of your word and will update the records accordingly. This is very common and a simple procedure, simply ask.