SACRAMENTO, Calif. May 5 California's
recovering real estate market means higher property taxes for
homeowners whose bills were reduced during the economic
downturn, despite tough protections against tax hikes imposed by
voters decades ago, a new report says.
After rising by double digits for years during the housing
boom, property values in some parts of the most populous U.S.
state dropped by more than half during the mortgage meltdown
that began in 2007, leading the tax collectors to grant
reductions in the levies charged to fund schools, local
government and other programs.
But values have started to climb back up, increasing by 12
percent in 2012 and almost 20 percent in 2013, the state
legislative analyst's office said in its report.
Most people in the state will not be affected, the report
said. But for those who purchased their homes at the top of the
market and later got a tax reduction, assessments will come back
up along with the value of their properties.
Property taxes in California are limited to 1 percent of a
home's assessed value - and increases in that value are
typically kept artificially low under the tax relief initiative
known as Proposition 13, which passed in 1978.
Under the law, the assessed value of a home may rise by just
2 percent each year, even if the market value of the property
increases by much more than that.
The exception, however, is when the assessed value of a
house or business property has been reduced due to a drop in the
market. In those cases, the assessed value rises in future years
to the market level, or to the level that it would have been
under Proposition 13's rules, whichever is lower.
People who purchased their homes at the top of the market
are the most likely to be in this position, because their taxes
would have been based on the market value at that time.
For them, tax rates could go up by as much as 20 percent
next year, and 10 percent per year after that, as the market
returns to its former level, the report said.
(Reporting by Sharon Bernstein; editing by Matthew Lewis)