Decline in Market Value (Prop 8)
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Proposition 8, passed in November 1978, amended Proposition 13 to recognize declines in value for property tax purposes. As a result, Revenue & Taxation Code Section 51 requires the Assessor to annually enroll either a property’s Proposition 13 base year value factored for inflation, or its market value as of January 1st, whichever is less.
Decline in market value, Prop 8 assessments, are TEMPORARY reductions that recognize the fact that the current market value of a property has fallen below its current Prop 13 factored value. Once a Prop 8 reduced value has been enrolled, that property’s value must be reviewed each year as of January 1st, to determine whether its’ current market value is less than its Prop 13 factored value. Prop 8 values can change from year to year as the market fluctuates. When the market value of the Prop 8 property increases above its Prop 13 factored value, the Assessor will once again enroll its Prop 13 factored value, but in no case may a value higher than a property’s Prop 13 factored value be enrolled.
Properties enrolled under Prop 8 provisions are not subject to the 2% annual increase limitation that applies to those enrolled under Prop 13 provisions.
The Process is as follows:
Property owner provides Assessor with facts they feel justify a reduction in value and requests a review of the property’s value. (The Assessor may initiate the review if the problem is discovered independently*.)
Appraisal staff reviews market data, estimates the property’s market value as of January 1st and then compares this market value to the property’s current Prop 13 factored base year value.
If current market value is below factored Prop 13 value, then:
If current market value is higher than factored Prop 13 value, then:
*The Assessor may also initiate the Prop 8 process without a request from an owner.
The office constantly monitors market conditions and, when practical, lowers assessed values on a mass basis. Owners are notified and may file an Assessment Appeal if they feel the value was not lowered sufficiently. Read more about the Assessment Appeals process and deadlines.
Although the market values of all properties may suffer a significant decline during a recession, not all will qualify for a Prop 8 reduction. The current market value must fall below the factored base year value (assessed value), before the Assessor can recognize the decline. Following are examples of how the Assessor processes declines in value.
Examples of Assessments Involving Properties Declining in Value:
Action: Assessor reduces assessed value to $300,000 for 2006-2007 assessment roll.
Action: Assessor reduces assessed value to $280,000 for 2007-2008 assessment roll.
Action: Assessor raises assessed value to $350,000 for 2008-2009 assessment roll.
Action: Assessor reinstates factored base year value of $432,972 for the 2009-10 assessment roll.
If you have other questions about the Decline in Value Prop 8 process, you may direct them to the Assessor’s Real Property Duty Appraiser at (916) 875-0700, between 9 A.M. and 4 P.M., Monday through Friday. You may also visit the Duty Appraiser in person at 3701 Power Inn Rd, Suite 3000, Sacramento, CA 95826-4329, between 8 A.M. and 5 P.M.