Assessment
	What is Proposition 13 Value?
	The Proposition 13 Value1 represents the maximum taxable value for your property. Since the passage of Proposition 13 in 1978, property is assessed at its fair market value as of the date it is acquired. Your purchase price generally becomes the taxable “base value” as of that date. From that point forward the taxable value of your property is limited to no more than a 2% increase per year.2 For example, if you purchase a property which gets assessed at $500,000, the annual taxes would be based on $500,000 the first year, trended to $510,000 ($500,000 x 1.02) the second year, and trended to $520,200 ($510,000 x 1.02) the third year, etc. Also see example below. In a declining real estate market, the market value of your property may actually be lower than your trended base value. In this case, your property may qualify for a decline-in-value reassessment, temporarily reducing the taxable value to its current market value. Once granted, a decline-in-value reassessment is reviewed annually and may be further reduced, partially restored, or fully restored to its trended base value. Example A property was purchased for $500,000. During a three-year period, the real estate market declined and recovered. The property owner filed for a decline-in-value reassessment. The following table shows the trended base value of the property, the market value of the property, and the assessed value of the property. Assuming a 2% annual consumer price index (CPI): Trended Base Value Market Value Assessed Value Year 1 $500,000 $500,000 $500,000 Year 2 $510,000 $480,000 $480,000 Year 3 $520,200 $510,000 $510,000 Year 4 $530,604 $550,000 $530,604 In Year 1, the property’s purchase price reflected the market value and was assessed accordingly. In Year 2, the property was granted a temporary decline-in-value to reflect its current market value. In Year 3, the property was partially restored to reflect its rising market value. In Year 4, the property was fully restored to its trended base value (maximum taxable value) even if its market value was now actually higher. 1 Also known as the Proposition 13 assessed value, Proposition 13 trended base value, factored base year value, and trended base year value. 2 The taxable value may increase more than 2% if a transfer of interest or new construction occurs on the property.
	Posted by Website, Monday, July 06, 2009

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