For most taxpayers, property taxes will be going down next year. According to State Board of Equalization Chair Betty Yee, preliminary estimates indicate that the Proposition 13 inflation factor for base-year values will be down 0.237 percent for 2010 assessments. (A final estimate will be released in December.) Using this figure, the decline in assessed value will be $237 per $100,000 of value. This will save taxpayers $2.60 per $100,000 at the average 1.1 percent property tax rate (including the rate for bonds).
This is the first time that Proposition 13's inflation factor, which has a 2 percent upper limit, has gone negative. In only five years since the adoption of Proposition 13 has it been less than 1 percent. The new factor reflects the deflation in the U.S. economy during the recession.
The preliminary estimate is based on the U.S. Bureau of Labor Statistics' Consumer Price Index (CPI) numbers released in mid-November. The official inflation factor, the California Consumer Price Index (CCPI), is calculated by the California Department of Industrial Relations using the same price data. The official CCPI number will be released soon, after which the BOE will notify county assessors of the rate to apply to assessed property values. This official notification will come through a Letter to Assessors released later this month.
While property owners who have Proposition 8 decline-in-value assessments below their base-year values will not see an immediate effect, they will benefit in the long run, because they will have a lower assessment ceiling when the value of their property increases.
Cal-TaxReports, December 7, 2009
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