June 2009

Property Tax Reduction Appeals

If you believe your home may be eligible for a reduction in property taxes based upon a decline in value, there are two ways you might proceed: an informal review by the Assessor's office and/or a formal appeal with Assessment Appeals Board. The formal appeal, in particular, can be a complicated and time consuming process but may be worth the effort for the savings in property taxes. If you need help gathering comparable sales data with which to make your case, I am happy to be of assistance. Typically, the Assessor's “valuation date” is January 1, 2009 and any sales comparables submitted must have closed before March 31, 2009.

Very generally speaking (it all depends on the neighborhood and other details of your purchase), homes purchased 2006 through mid-2008 probably have the best cases for a property tax reduction. The less affluent areas of the city typically peaked in value around 2006 and the more affluent in 2007 - 2008. Declines from peak value generally run in the 10% to 30% range, with the less affluent southern neighborhoods being hit with the largest reductions. (For a broad analysis of value changes by neighborhood, see the Newsletter link at the bottom of this page.)

Please note: If your appeal is successful, the reduction in assessed value only applies to the 7/1/09 - 6/30/10 tax year. A decline-in-market appeal is only good for 1 year, the year for which it is filed.

Informal Review

The Assessor's Office is now accepting, through 8/28/09, “Requests For Informal Review Of Assessed Value” for tax year 2009/2010. This applies only to single-family dwellings, residential condominiums, townhouses, live-work lofts and cooperative units.

The SF Assessor's website offers information regarding Decline-in-Value Informal Reviews:

SF Assessor's Office Forms and FAQs

Formal Appeal

The next open formal appeal filing period for San Francisco will be July 2, 2009 to September 15, 2009 -- to appeal the 2009/2010 assessed value of your property. A formal appeal can be made for multi-unit and commercial properties, as well as for houses, condos & cooperative units.

These 2 websites offer details regarding the filing of a formal appeal - the instructional videos are highly recommended for those who wish to proceed:

Warning on Scams

There are a number of property-tax-appeal service companies, who have been sending out their solicitations on stationery that suggests a government agency affiliation. SF Assessor-Recorder Phil Ting has stated the following:

“We've received reports from dozens of taxpayers who have received a letter from companies offering to facilitate the property tax reassessment for $179 [or more]. This is unnecessary and deceptive. Taxpayers can fill out a simple, one-page application for a review of their property in my office, free of charge, starting on April 15. There is no need to pay for this service.” Many of the solicitations received by San Francisco homeowners may be illegal.

Excerpted FAQs

How is the amount of my property tax determined?

In order for the amount of your tax to be determined, the Office of the Assessor/Recorder must first assess the value of your property. Generally, the assessed value is the cash or market value at the time of purchase. This value increases not more than 2% per year until the property is sold or any new construction is completed, at which time it must be reassessed. For more information on how the assessed value is determined, contact the Office of the Assessor/Recorder at (415) 554-5596.

After the Office of the Assessor/Recorder has determined the property value, the Office of the Controller applies the appropriate tax rates, which include the general tax levy, locally voted special taxes, and any city or district direct assessments. The general tax levy is determined in accordance with State law and is limited to $1 per $100 of assessed value of your property. After applying the tax rates, the Office of the Controller calculates the total tax amount. Finally, the Office of the Treasurer & Tax Collector prepares property tax bills based on the Office of the Controller's calculations, distributes the bills, and then collects the taxes.

Neither the Board of Supervisors nor the Office of the Treasurer & Tax Collector determines the amount of taxes.

Do I have any recourse if I disagree with the valuation placed on my property by the Assessor?

Yes. If you disagree with the assessed value of your property you may contact the Office of the Assessor at (415) 554-5596. They can provide you with information on how the value was established.

If you still disagree with the assessed value of your property after reviewing it with the Office of the Assessor/Recorder, you may contact the Assessment Appeals Board for the purpose of appealing your assessment.

If you choose to appeal your assessment, you must still pay your property tax in full by the appropriate deadlines; otherwise, you will incur penalties while the case is on appeal. If your appeal is granted, a refund will be issued to you.

Appeal applications and further information about the appeal process can be obtained by contacting the Assessment Appeals Board.

Before You File a Formal Appeal with the Assessment Appeals Board

You may not need to file a formal appeal with the Assessment Appeals Board. Beginning April 1, 2009, the Assessor's office will be accepting requests for an Informal Review of your 2009/2010 property value. The Informal Review forms can be obtained from the Assessor's website. If the Assessor's staff discovers an error, they may be able to correct that error, and you may not need to file a formal appeal with the Assessment Appeals Board.

If, however, you and the Assessor's office cannot reach an agreement, you can usually appeal your assessment to the Assessment Appeals Board during the appropriate open filing period. If you want to file a formal appeal for the value of your property, you must complete an “Application for Changed Assessment,” and your application must be filed with the Assessment Appeals Board in a timely manner.

Who Can File a Formal Appeal

An assessment appeal can be filed by the property owner or the owner's spouse, parents, or children, or any person directly responsible for payment of the property taxes; this person becomes the “Applicant”. An application may also be filed by an authorized agent. If an application is filed by an agent - other than a California licensed attorney - written authorization, signed by the applicant, is required.

How to File a Formal Appeal

Obtain, complete, and return an “Application for Changed Assessment” from the Assessment Appeals Board of San Francisco. We do not accept versions of the form from other counties or the State Board of Equalization. Completed applications must be postmarked on or before the deadline date to be considered as timely filed.

All information is from sources deemed reliable but subject to error and omission, and not warranted. Interested parties should contact the appropriate government agency to confirm all pertinent guidelines and procedures.

The San Francisco Market Heats Up!

The city's real estate market has warmed up significantly in the last couple months. And while it is true that spring is typically a strong period for home sales, considering the fears prevalent just a few months ago, it is heartening that the market has indeed strengthened. There is a growing -- but certainly not universal -- consensus that the market has reached or is very close to its bottom - this belief, along with low loan rates and tax benefits, has motivated increasing numbers of buyers to act.

From April 15th to May 15th, 2009, 357 SF homes sold at a median price of $688,000 and an average price of about $880,000. Of these, 72 closed for $1,000,000 or more, 18 sold for $2,000,000+, and 5 sold for $5,000,000+. 28% accepted offers within 2-3 weeks of coming on market.

Year over year, the number of sales is down 21%, the median price is down 17% and the average price down 18%. Some of the price decrease is due to a considerable reduction in home values but some is due to the major shift towards lower priced homes that has occurred since last year. Remember that city statistics generalize the wide variety of changes that different neighborhoods are experiencing. A fair number of homes (houses more often than condos) are still selling quickly at or over asking price.

As of May 22nd, there were 1664 homes actively for sale in San Francisco and 836 homes which had accepted offers but not yet closed sale. (Not all of those will actually close escrow as the fall-out rate is still high by historical standards.) The months supply of inventory (MSI), which is one common measure of the balance of power between buyers and sellers, has been declining since the beginning of the year, though it is still about twice as high as a year ago. Our current market still qualifies as a “Buyer's Market” but has definitely become more balanced.

The Luxury Home Market

Upper-end home sales seem to be picking up as well, though the rate of sales is still far below that of previous years. The financing situation for expensive homes continues to be difficult, so buyers for such properties typically pay all cash or put down-payments of at least 30-40% of the sales price. Though cash-rich buyers are moving back into the real estate market, until financing becomes easier, high-end sales will remain far below previous levels.

In 2009 to May 22nd, 39 houses sold for $2,000,000 or more: their average size was 4062 square feet, with an average price of $3,400,000 and an average dollar per square foot of $773. In the same period, 14 condos sold for $2,000,000 or more, with an average size of 2300 square feet, an average price of $3,000,000 and an average dollar per square foot of a whopping $1317 (think spectacular view condos in very prestigious buildings). Almost half these home sales, 21 houses and 2 condos, took place in the Pacific & Presidio Heights/Marina district. 10 house sales occurred in the Noe-Eureka-Haight area; 2 houses and 7 condos sold in the Russian/Nob/Telegraph Hills area; and 5 high-end condos sold in the South Beach and SOMA districts. A few sales also closed in neighborhoods such as Sea Cliff and St. Francis Wood. Year over year, virtually every neighborhood saw drops of 50% or more in the number of sales of these very expensive homes.

As an indication of the increase in activity in this market segment, there are currently 20 homes priced $2,000,000+ which have accepted offers, but not yet closed sale. 12 are in the Pacific & Presidio Heights/Marina district; 3 in the Noe/Eureka/Haight district; and 2 are in the Alamo Square area.