As a California-based real estate investment company, Gatsby Investment is proud to support CA property owners in creating sustainable housing market growth while protecting their bottom lines. One critical way to protect your financial investment in CA real estate is to avoid excessive property taxes.
With California’s property tax appeal season in full swing, today’s post is specifically to help our California property owners determine if they are being taxed fairly and take action if they’re being over-taxed.
What Is a Property Tax Appeal?
A property tax appeal is a formal protest of the county tax assessor’s estimate of your property’s value for tax purposes (called the assessed value). This value can be found on your Notice of Assessment or your tax bill. You can also look up the value online (in most counties) by visiting your county’s tax assessor’s website.
Your property taxes are heavily based on this assessed value. So, if you can convince the assessor to reduce the assessed value, you can lower your property taxes.
Prop 13 Appeals vs. Prop 8 Appeals
California offers two different types of property tax appeals:
- Prop 13 Base Year Appeals
- Prop 8 Decline in Value Appeals
Prop 13 appeals only apply to new “base year” values enrolled due to new construction or a change in ownership. If the county assessor enrolls an unfairly high value when processing a change in ownership or new construction, you can submit a Prop 13 base year appeal to correct the value. This appeal must be filed generally by September 15 or 60 days after receiving your assessment notice (whichever is later) in the year the new base value was established. A successful appeal permanently lowers the base year value. This is important because assessed value increases are limited to 2% per year from the base year value. So a base year reduction typically lowers property taxes for as long as you own the property.
Prop 8 allows for temporary reductions in assessed value when the market value of a property dips. CA property owners have an opportunity to submit Prop 8 appeals every year if the value of the property declines due to economic conditions or some other factor impacting the property’s value. For example, if your property was worth less than the assessed value as of January 1, 2025 (the lien date), you may have grounds for a Prop 8 appeal, which would lower your tax bill for 2025 only (the assessed value can be adjusted upward in future years, up to the Prop 13 capped amount, if the market rebounds).
Prop 8 appeals must be filed between July 2 and September 15 in the following counties: Alameda, Alpine, Inyo, Kings, Mono, Placer, San Francisco, San Luis Obispo, Santa Clara, Sierra, and Ventura. In all remaining CA counties, Prop 8 appeals must be filed between July 2 and November 30.
When Should You Appeal Your Property Taxes?
In general, you should appeal your property taxes whenever the assessed value is higher than the property’s fair market value (as of the lien date).
For example, if your assessed value as of January 1, 2025, is $900,000, but the property was worth only $800,000 at that time (based on an appraisal or comparative market analysis (CMA) showing sales of comparable properties around that time), you should probably appeal.
Questions to consider before appealing:
- Did you own the property on the lien date? Generally, only the party that owned the property on the lien date is entitled to an appeal. If you purchased the property after the lien date, you should watch for the change of ownership notice and consider appealing the base year instead. If you sold the property before the lien date, you will not be responsible for those taxes anyway.
- Is an appeal worth your time, effort, and expense? The process typically involves submitting an appeal application and presenting an appraisal or CMA (Comparative Market Analysis) to support your opinion of value. Some counties also charge an application fee (most often in the $30-$60 range).
- Is it worth hiring a property tax consultant? Owners can often handle small residential buildings on their own, but if you own large apartment complexes or other commercial/industrial property, you may want to hire a professional. They typically work on contingency, charging somewhere between 30 and 50% of the tax savings.
How to Appeal Your Property Taxes
Here’s a simple three-step plan for appealing your property taxes if you believe the assessed value is too high:
- File an appeal application. You can find the appeal application on your county assessment appeals board website (look for form BOE-305-AH). Some counties even offer online appeals. It is important that you pay your tax bill in full, on time, even if you have an appeal pending. Any overpayment can be refunded with interest after the case is decided.
- Present your case to the county appraiser, hearing officer, or assessment appeals board. The exact procedures vary by county and property type, but you’ll typically get instructions for presenting your case within 3-6 months after filing your application. Some cases can be resolved via email/phone by providing an appraisal conducted around the time of the lien date. Others require you to present comparable properties to support the value and/or cap rate you believe is fair in front of the local assessment appeals board.
- Track the results. If a reduction is granted, you’ll likely receive a tax refund for the overpayment plus interest. If a tax bill is pending payment, you may receive a corrected tax bill for the lower amount.
Should You Appeal Your 2025 California Property Tax Bill?
Appealing your California property taxes can be a smart financial move if your assessed value is higher than your property’s fair market value. Whether you’re filing a Prop 13 base year appeal to secure a permanent reduction or a Prop 8 decline-in-value appeal for temporary relief, the potential tax savings can be significant.
At Gatsby Investment, we believe informed property owners are empowered property owners. If you think your 2025 California property tax bill is too high, now is the time to review your assessment, understand your appeal options, and protect your investment from unnecessary costs.