Proposition 8 – Decline in Market Value

This proposition allows the Assessor to temporarily lower assessments when the market value on January 1 is lower than the factored base year value for that year.

  • If you feel your property has suffered a decline in value; that is, the current market (saleable) value of your property has fallen below the current assessed value as shown on the assessment roll, you may request a “Prop 8” decline in value “free” reassessment by the County Assessor.
  • Upon written application by the property owner to the Assessor’s Office the property value will be reviewed as of the preceding January 1st lien date. The last day to file an application for the preceding January 1st lien date is December 31st.
  • If the market value of the property is less than its factored base year value, market value will be enrolled for that specific assessment year.
  • Whenever such relief is provided, the Assessor is obligated to annually review and enroll the lesser of either market value or the factored base year value, but never higher than the factored base year (Proposition 13) value.
  • Call, write or visit the Assessor’s district office for more information
  • If it is determined that the current market value of the property exceeds the factored base year value, the factored base year value will be fully restored for the assessment year.  When the factored base year value is restored, the property will no longer require an annual review and will then be subject to assessment under Prop 13 provisions. The application for “decline in value” reassessment (Prop 8)
  • Under Prop 8, assessed values might increase by more than 2% per year if market conditions warrant it. However, an assessed value will never exceed its Prop 13 value. Once the Prop 13 value is restored, the assessed value will be limited to a maximum annual increase of no more than 2%.
Chart Description
  • Initial base year value: In year 1, the subject property was purchased (transferred) for $200,000 and the Assessor enrolled that amount as the base year value.
  • Year 2: The market value of the property has grown to $250,000. The maximum amount the property could be assessed under proposition 13 is $204,000 ($200,000 + 2%).
  • Years 3-6: The market value of the property has decreased below the factored base year value (prop 13) limit. The assessment, upon request of the property owner, would be reduced to the actual market value.
  • Year 7: Although market value reaches $300,000, assessed value is just $225,232 (value at acquisition plus 2% for every year after base year).

FAQs

Property Tax Savings: Proposition 8

To apply for a Decline-in-Value Review, you must submit form Insert # to the Assessor’s Office between January 1st and December 31st . Applications are considered timely if they are postmarked by December 31st. If December 31st falls on a Saturday, Sunday, or a legal holiday, application will be accepted if filed or postmarked by the next business day.

On your application, you encouraged to provide information that supports your opinion of value as of January 1. The most effective documentation includes details on sales of comparable properties.

Proposition 13, adopted by California voters in June 1978, mandates that the Assessor appraise real property based on its value at the time of ownership or new construction.

The factored base year value (FBYV) of real property is either the market value from 1975 or the value established when the property last changed ownership or underwent new construction. This value is then adjusted by an annual inflation factor not to exceed 2% per year.

The price at which a property, if exposed for sale in the open market with a reasonable time for the seller to find a purchaser, would transfer for cash or its equivalent under prevailing market conditions between parties who have knowledge of the uses to which the property may be put, both seeking to maximize their gains and neither being in a position to take advantage of the exigencies of the other.

A property sold with features and location 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.

Decline-in-value reassessments are temporary but last at least one year. The assessed value of your property may adjust up or down based on its market value as of January 1 of each subsequent year. Your assessed value will never increase above its factored base year value. When a property is taken off Prop 8, its assessed value will increase by an annual inflation factor not to exceed 2% per year.

Yes, you have the right to request an informal review if you believe the market value of your property on January 1 has fallen below the Prop 13 FBYV.

Yes, all real property qualifies for Decline-in-Value reviews.

You can file an appeal with Assessment Appeals Board through the Clerk of the Board’s website. For filing deadlines and additional details about the appeals process, please visit the Clerk of the Board website at https://cob.sbcounty.gov/assessment-appeals/.

Form Name: Source:
Application for 'Declined in Value', Proposition 8 ARP-068
Return to More Property Tax Savings Opportunities