Property Value Tax Reassessment
Under Proposition 13, real property is reassessed for property tax purposes only when a change in ownership occurs or when new construction is completed. "New construction" is any improvement outside of normal maintenance. It does not mean only construction of a "brand new" building.
Once a reassessment is made the property value -for tax purposes- may not increase by more than 2% annually. When a reassessment is made the difference between the existing value and the new value is called a "Supplemental Assessment". Owners will receive a separate tax bill that details the property tax to be paid/refunded according to the new assessed property value.
It's rare in San Francisco for a residential property to lose value. However there are situations where a property may be being taxed at a higher value than the property is actually worth. For instance, this was common in the aftermath of the 1989 earthquake. If you have reason to believe your property is being taxes at a value higher than its worth, you can appeal the assessment.
The process requires some legwork so it isn't something to attempt out of hope you might get a lower tax bill. It's likely only worth the time and trouble if the difference between the assessed value and the actual value is significant. Remember that the property tax rate is 1.14% so a change in value of $100,000 will only generate $1140 of tax savings annually. Assessment can be appealed by contacting the County Assessment Appeals Board at City Hall ((415) 554-6778). Appeals may only be filed between July 2 and November 30 of a given calendar year.
There are some important tax exemption and tax assistance options available to property owners.
Homeowners Exemption - An exemption of $7000 from the assessed value of a property is available to homeowners who occupy the residence as their principle place of residence on January 1. You must apply to receive the exemption. New home owners will receive an application automatically after their sale is finalized. Existing property owners should verify that they aren't already receiving the exemption before requesting an application or applying for it. For more info contact the Valuation Division at 415-554-5599.
Disaster Relief - If a major disaster such as fire, earthquake, or flooding were to damage your property in excess of $5000, you may be eligible for property tax relief. You must file a calamity claim form with the Assessor's Office within 60 days from the date the property was damaged or destroyed. The Assessor's office will then reappraise the property to reflect its damaged condition and related valuation. One important factor is that, once rebuilt or repaired after a disaster reassessment, the property retains its adjusted value for tax purposes. For more info contact the Assessor's Office at 415-554-5596.
Builder's Exclusion - Builder's may be excluded from supplemental assessment in cases where they are building specifically for sale. The builder must file a claim form with the Assessor at least 30 days before new construction begins. Without this claim form, the builder will be assessed the supplemental property tax value on the new construction. With the form, the assessment is not created until the property is sold to the new owner. For more info contact the Assessor's Office at 415-554-5596.
Properties Acquired by the Governmental (Eminent Domain) - If a government agency acquires your property, you may have the right to retain its existing value and transfer it to a replacement property. The replacement property must be comparable to the property acquired, and an application form must be filed with the Assessor within four (4) years from the date of acquisition.
Veterans' Exemption - A Veterans Homeowner’s Exemption is available for property owned by disabled veterans or their spouse. If qualified (what constitutes "disabled" for the purpose of this exemption may be considered strict to some so it is advisable to verify eligibility), veterans are provided exemptions up to $150,000 of taxable property value. For more information contact the Assessor's Exemptions Division at 554-5658.
Reappraisal Exclusion for Seniors or Disabled - Property owners who are disabled or who are senior citizens over 55 years of age can buy a replacement residence of equal or lesser value than their existing home and transfer their current tax value to the new home. This is to prevent seniors/disabled persons from being "taxed out of their city" when they want/need to move to a home that better suits their needs (i.e no stairs, less upkeep, etc). For more information call the Assessor's Office at (415) 554-5596.
Reappraisal Exclusion from Parent to Child - Parents often want to transfer ownership of the family home to their children. This transfer can be excluded from reappraisal for property tax purposes along with up to $1M in assessed value of any other property. An application must be filed with the Assessors Office. For more information, call (415) 554-5596.
Property Tax Assistance - Property tax subsidies may be paid to people who are blind, disabled, at least 62 years old, or below a certain minimum annual income level. For more information call the Franchise Tax Board at 1-800-338-0505, or visit www.ftb.ca.gov. The same people may also qualify for property tax postponement via the State Controller's Property Tax Postponement Program. Postponed taxes are placed as a lien on the home and become due with interest upon moving, sale, or death. This program is administered by the California Controller’s Office. For more information call the State Controller's Office at 1-800-952-5661, or visit www.sco.ca.gov/col/taxinfo/.