Another Housing Bubble? (San Diego, San Francisco, Riverside: assessor, cabinets, property taxes)

[earlyretirement]

Originally Posted by JohnSoCal

Your property taxes will also increase if you add a room. Any home improvement or addition requiring a permit will result in higher property taxes..

True but most people doing renovations aren't doing renovations that require permits. Sure, some add rooms, etc. but the most common renovations that add value to the home and are done are things that don't require permits yet raise significant value to houses and tax exposure doesn't go up.

In our house we've re-landscaped our yard (front and back), we upgraded all 5 bathrooms to Carrera marble bathrooms, changed out all the sinks, changed all the knobs in the house, put in new hardwood flooring, put in new window shades, put in custom closets, upgraded most of the lighting, redid our staircase and added iron balusters, changed out all the toilets, and several other things.

These types of things are more common renovations and the great thing is they add on value yet don't add on any more property tax exposure.

[docmcstuffin]

Originally Posted by JohnSoCal

Your property taxes will also increase if you add a room. Any home improvement or addition requiring a permit will result in higher property taxes..

Not all. New water heater, hvac, etc. Needs permit. Yet, that won't affect your taxes. Even big things like solar that requires permit doesn't increase taxes.

[JohnSoCal]

Originally Posted by earlyretirement

True but most people doing renovations aren't doing renovations that require permits. Sure, some add rooms, etc. but the most common renovations that add value to the home and are done are things that don't require permits yet raise significant value to houses and tax exposure doesn't go up.

In our house we've re-landscaped our yard (front and back), we upgraded all 5 bathrooms to Carrera marble bathrooms, changed out all the sinks, changed all the knobs in the house, put in new hardwood flooring, put in new window shades, put in custom closets, upgraded most of the lighting, redid our staircase and added iron balusters, changed out all the toilets, and several other things.

These types of things are more common renovations and the great thing is they add on value yet don't add on any more property tax exposure.

The person I was replying to was talking about adding a room which definitely requires a permit. Patio covers require permits. Of course many renovations don't require permits but that was not the issue. Adding the room was.

[JohnSoCal]

Originally Posted by docmcstuffin

Not all. New water heater, hvac, etc. Needs permit. Yet, that won't affect your taxes. Even big things like solar that requires permit doesn't increase taxes.

I can't answer about solar. The other things are replacements and don't increase the value of your home. As I said, the issue is about adding a room. I bought my home brand new. The next year i put in an inground pool/spa and patio cover. both items required permits and both items raised my property tax by the cost of the items that was reported on the permits. This happened to be in 2003 when prices were escalating at 30%. I talked to the county tax people in person about it explaining that putting in a pool and patio cover doesn't raise the price of your home by the cost of the items. However they could do it because prices went up so the home was still assessed much lower than the actual value.

One thing I did was to pay cash for all the extra builder upgrades instead of put it on my mortgage. That way they were not included in the price of the home and thus lowered my initial assessed value by $35,000. Had they been on the mortgage, the assessed value would have been the base price of the home plus upgrades instead of just the base price. My total tax rate is 1.15% including all fees as we don't have Mello-Roos.

[earlyretirement]

Originally Posted by JohnSoCal

I can't answer about solar. The other things are replacements and don't increase the value of your home. As I said, the issue is about adding a room. I bought my home brand new. The next year i put in an inground pool/spa and patio cover. both items required permits and both items raised my property tax by the cost of the items that was reported on the permits. This happened to be in 2003 when prices were escalating at 30%. I talked to the county tax people in person about it explaining that putting in a pool and patio cover doesn't raise the price of your home by the cost of the items. However they could do it because prices went up so the home was still assessed much lower than the actual value.

One thing I did was to pay cash for all the extra builder upgrades instead of put it on my mortgage. That way they were not included in the price of the home and thus lowered my initial assessed value by $35,000. Had they been on the mortgage, the assessed value would have been the base price of the home plus upgrades instead of just the base price. My total tax rate is 1.15% including all fees as we don't have Mello-Roos.

John,

But couldn't you do an appeal for these increases in value? Especially considering the bubble timing? Have you since done any appeals to bring your property taxes down?

[JohnSoCal]

Originally Posted by earlyretirement

John,

But couldn't you do an appeal for these increases in value? Especially considering the bubble timing? Have you since done any appeals to bring your property taxes down?

At that time I couldn't do an appeal because the assessed value was well below the market value.

I didn't have to do any appeals when the bubble broke. Our County ( Riverside ) was proactive and reassessed the homes down to the market value. They did this each year after the bubble broke. My property tax dropped by about 30% and was just about exactly what it should have been. Riverside County had thousands of new homes built in the 2003-2007 period so they were smart enough to realize that they would be deluged with appeals if they didn't act on it. There were thousands of people that had reductions of 60% or more. Prices have risen a lot in the past 6 months so my assessed value will go back to what it was prior to the bubble breaking. The 2% annual limit doesn't apply when recovering from a price drop. My assessed value was much lower than the market value before the price drop.

[earlyretirement]

Originally Posted by JohnSoCal

At that time I couldn't do an appeal because the assessed value was well below the market value.

I didn't have to do any appeals when the bubble broke. Our County ( Riverside ) was proactive and reassessed the homes down to the market value. They did this each year after the bubble broke. My property tax dropped by about 30% and was just about exactly what it should have been. Riverside County had thousands of new homes built in the 2003-2007 period so they were smart enough to realize that they would be deluged with appeals if they didn't act on it. There were thousands of people that had reductions of 60% or more. Prices have risen a lot in the past 6 months so my assessed value will go back to what it was prior to the bubble breaking. The 2% annual limit doesn't apply when recovering from a price drop. My assessed value was much lower than the market value before the price drop.

Ah that's great to hear Riverside was so proactive! I've heard some horror stories about people going through appeals so really great and wise that they took that initiative.

Oh, that's really good to know about the 2% annual limit when it's reassessed during a recovery. I was wondering about that and great to know. Do you think they will start raising this year? And what formula do they use? Recent comps? I guess that would be the negative side of the rapid 20% rise in the past year.

I've always said a recovery that quick is NOT healthy for anyone.

[oddstray]

Originally Posted by earlyretirement

Ah that's great to hear Riverside was so proactive! I've heard some horror stories about people going through appeals so really great and wise that they took that initiative.

Oh, that's really good to know about the 2% annual limit when it's reassessed during a recovery. I was wondering about that and great to know. Do you think they will start raising this year? And what formula do they use? Recent comps? I guess that would be the negative side of the rapid 20% rise in the past year.

I've always said a recovery that quick is NOT healthy for anyone.

I bought my condo just before the Fall-Of-The-Wall recession. The value went down so I filed for property tax relief. It was easy. They do use recent comps - you need to provide five of them. The county records hadn't yet been put on-line, so I went to a local realtor who pulled up comps for me. I think nowadays you could probably look them up yourself.

[earlyretirement]

Originally Posted by oddstray

I bought my condo just before the Fall-Of-The-Wall recession. The value went down so I filed for property tax relief. It was easy. They do use recent comps - you need to provide five of them. The county records hadn't yet been put on-line, so I went to a local realtor who pulled up comps for me. I think nowadays you could probably look them up yourself.

Right. But how does it work on the way up like now when values in some areas of San Diego have gone up 20% year over year?

Do they automatically raise your assessment immediately this year? For example, I believe on Friday they released the upcoming tax rolls for the 2013/2014 tax year. My value only went up 2% per Prop 13. Did you guys that got property tax relief in the form of lower assessments, see your assessment go up already? If so, how bad was it?

If not, when does it kick in? Do they only do it every year when they do the annual assessment?

[docmcstuffin]

Originally Posted by JohnSoCal

I can't answer about solar. The other things are replacements and don't increase the value of your home. As I said, the issue is about adding a room. I bought my home brand new. The next year i put in an inground pool/spa and patio cover. both items required permits and both items raised my property tax by the cost of the items that was reported on the permits. This happened to be in 2003 when prices were escalating at 30%. I talked to the county tax people in person about it explaining that putting in a pool and patio cover doesn't raise the price of your home by the cost of the items. However they could do it because prices went up so the home was still assessed much lower than the actual value.

One thing I did was to pay cash for all the extra builder upgrades instead of put it on my mortgage. That way they were not included in the price of the home and thus lowered my initial assessed value by $35,000. Had they been on the mortgage, the assessed value would have been the base price of the home plus upgrades instead of just the base price. My total tax rate is 1.15% including all fees as we don't have Mello-Roos.

But upgrading do increase the value of your home. A fully upgraded house vs a 80s interior house definitely vary greatly in price. In my area, you're talking easily 5-10%. WRT to solar, I can because I have solar. The system did not raise my tax at all. I don't know if solar raises value or not, but it probably would help me sell quicker. The appraiser did give me increase value for the solar though.

WRT to your situation, that's very interesting. So, you're saying when you got the pool, it raised the assessed value by $35k (the cost of the pool)? So, how does that differ from just having the builder do it and finance it? Either way, your assessed amount is the same whether you do it after or by the builder. Am I misunderstanding your point?