Are you paying too much in property taxes? If your assessed value is higher than the current value of your property, you may be paying too much. How could this happen? Let’s look at a handful of situations that could cause a drop in value.
Most often, the tax assessor places the initial assessed value of a property at the amount the property sold for. Home values rise and fall with the market. Thankfully, we’re in an area where we see more rising than falling, so this is a fairly rare scenario. That said, we saw a significant, short surge in values during the first quarter of 2022. If you bought your home around that time, your assessment may be too high.
Another possible situation is someone who bought in recent years and bid significantly over their competitors, to make sure that they got the house. For example, a dreamy, 4 bedroom, 3 bathroom Danville house that should have sold for $2,250,000, went on the market in April 2024, listed for $1,900,000. Due to high demand, low inventory, and the low asking price for this home, the sellers received 9 offers. Seven of the offers came in at or slightly above the asking price. However, 2 of the offers came in at over $2,600,000. Of course, the sellers chose one of the highest offers. Even though two buyers decided last year that the home was worth over $2,600,000, today’s reality might be closer to $2,200,000.
A dramatic change in the condition of a property could also impact value. The most common conditions that hurt property values are water damage, mold, fire damage, foundation/settling problems and soils/stability concerns. Some of these conditions may be covered by insurance, while others will not. If insurance is covering the cost of your repairs, it’s fair to say that there is no real loss in value.
However, if the damage is not covered, or if it results in a significant disclosure when it’s time to sell your home, you may have a case for a lowered assessment.
Speaking of insurance, a more recent impact on property values may be the lack of affordable insurance options in very high fire hazard zones, creating less demand for those properties and/or limiting the amount a buyer is willing to pay. Similar circumstances can exist for properties that have been impacted by local flooding.
California State Revenue and Taxation Code, Section 51 authorizes the Assessor to temporarily lower the assessed value of any real property when it is greater than the market value as of the January 1, lien date. If you have evidence that the market value of your property as of January 1, 2025 is less than the assessed value, you can file a simple “Request for Value Review” with the County Assessor.
To start the process, simply go to the Contra Costa County Tax Assessor’s page (https://www.contracosta.ca.gov/191/Assessor) and select, “Review Your Value.” Select the appropriate property type. This takes you to a very simple, one page form that you can print, complete and return to the Assessor. The form asks for your contact information, the property information, and 3 “comparable sales” to support your case. Please note that you must still pay any tax bills received, on time. If the review results in a change in your assessed value, then your taxes will be adjusted to reflect the difference.
Unless you are really up on the market, the best way to find your 3 “comparable sales” is to contact your REALTOR®, who can provide you with the most accurate data. It’s important to note that the circumstances this year may be especially favorable, as values on January 1st were quite low, following the slower than average real estate market in 2024 (primarily due to the election year, significant restructuring of the industry, and dashed hopes of lower interest rates). We are currently seeing an active spring market and some values have picked up again. If you’re curious about the value of your home and/or whether or not you may qualify for a Value Review with the Assessor, please feel free to reach out to me at 925-964-5010 or via email at Lisa.Hopkins@Compass.com. I’d be happy to provide you with a complimentary evaluation.
