Property Tax Relief: Helping Homeowners but Hurting Schools & Students

One of the areas in the Silicon Valley that has been hit the hardest by the mortgage meltdown is the East Side of San Jose while areas like Sunnyvale, Palo Alto, Los Gatos and Cupertino are still holding strong in value.

With property values coming down in some areas, their assessed value has also come down making it possible for homeowners that got into the real estate market beginning in 2005 to receive a reduction in their property tax bill.

As a rule of thumb, the property assessed value is calculated by using the purchase price with a 2 percent increase each subsequent year. This increase is limited to 2 percent yearly because of Proposition 13 per California State law.

Beginning in May, the Santa Clara County Assessor’s office will be sending preliminary notices telling more than 41,000 homeowners that their property assessed value may be higher than their market value therefore needing an adjustment. Homeowners will see their property tax bill reduced beginning in October.

Although this reduction in the property tax bill will be a small financial relief for homeowners who may be struggling with high mortgage payments, it will hurt financially several school districts. Some school districts receive their revenue directly from the local property taxes paid by homeowners. Less revenue from property taxes means salary decreases for school staff and other cuts.

You can see a visual explanation of how California schools are funded with our taxes in this video “California School Finance in Plain English” by the very talented and creative people at Common Craft. A video specially created for the “Right to Learn” part of the YouthNoise organization.

http://www.youtube.com/watch?v=Wsu2L5jfIFA

According to the Santa Clara County Assessor’s office the school districts that have been affected the most by the real estate slump are the East Side Union, Santa Clara Unified, Fremont Union, Milpitas Unified, San Jose Unified school district as seen on this map courtesy of the San Jose Mercury News which also shows a chart per school district and their total decline in assessed value, number of properties that decline in value, total estimated decline in taxes and average decline in taxes per property (PDF format).

For those homeowners who bought properties before 2005 or those who bought properties in highly desirable areas like Palo Alto or Cupertino, your assessed value may still be a lot lower than the market value but if you feel that you may qualify for a re-assessment you can contact the Santa Clara County Assessor’s office before July 1st via email, phone or in person. If you miss this deadline, you can appeal by filling a form with the clerk of the board of supervisors.

As always, scam artist always find a way to steal your money. You can contact your county assessor’s office yourself and you can file an appeal to your property assessed value yourself so beware of any company offering to do it for you as briefly explained in this article “For Some, It’s Time To Appeal Property Tax Bills” from Realty Times.

You may also read this “Q & A: Will your property taxes go down?” from the San Jose Mercury News.