San Luis Obispo County’s assessed property value has reached an all-time high of $43.6 billion, up 5.81 percent from 2013.
The increase is the product of a strengthening real estate market that is driving home prices higher, said Tom Bordonaro, county assessor.
“This is great news for homeowners, as the equity in their home increases with market increases,” he said.
On the flip side, many homeowners are finding their property taxes increasing. These taxes are used to fund a variety of public services including schools and government.
Annual property tax revenues are 1 percent of the net assessment, Bordonaro said. This means $436 million in property taxes will be generated.
The bulk of the money, nearly 62 percent, goes to school districts, followed by the county general fund, which receives nearly 25 percent. The rest is spread between cities and special districts.
Property tax assessments are dictated by Propositions 13 and 8, both of which were passed in 1978. Proposition 13 establishes the base year value for property tax assessments. It caps the growth of an assessed value at no more than 2 percent a year.
Proposition 8 allows a property tax to be temporarily reassessed at a lower value if the market value of the property drops below the base value. Property values peaked in 2006 and then dropped as a result of the recession.
“The peak was followed by months of market inactivity as homeowners continued to have hopes of receiving top dollar for their property,” Bordonaro said. “As overall economic conditions deteriorated, property owners failed to make mortgage and property tax payments, and property values began to fall, marking the decline phase of the housing cycle.”
According to Proposition 8, properties in the county were reviewed for potential decline in value. As many as 56,000 properties were reviewed annually, resulting in a cumulative countywide reduction in assessed value of more than $5.1 billion.
Since then, property values have begun to recover and property tax assessments have begun to rise accordingly. Assessments of individual homes will continue to rise annually until the full Proposition 13 value has been restored.
“Proposition 13 provides a ceiling on property taxes, while Proposition 8 acts as a floor,” Bordonaro said. “Under the current market, over one-third of San Luis Obispo County homes fall somewhere in between.”
Property owners whose homes have reduced values under Proposition 8 should have received an annual Notification of Assessed Value in the mail in early July.
The notice will contain the assessed value, the Proposition 13 value and instructions about what to do if the homeowner does not agree with the assessed value.
Anyone with questions should call the Assessor’s Office at 781-5643.