Wednesday, Jul. 02, 2008

Upside to the housing slump: Lower taxes

County will have the greatest number of tax reductions in its history, officials say.

By LESLIE ALBRECHT
lalbrecht@mercedsun-star.com

As property values continue to plunge, Merced County homeowners can take comfort in the housing slump's silver lining: lower tax bills.

Countywide, 21,282 property owners will see their property taxes shrink this year -- the largest number of tax reductions the county has ever seen, said Merced County Assessor Kent Christensen.

The county's assessed property values have dropped 2.4 percent since last year, according to data the Assessor's Office released this week. The decline in values is the first Christensen has seen in his 30 years with the county.

Last year, the total value of property on the county's tax roll was $20.5 billion. This year, the total value dipped to $20.04 billion.

The decrease in property values comes two years after the county saw its biggest ever spike in values. Between 2005 and 2006, values shot up a record 21 percent.

"We had a huge increase, property values went way up and they've gone down and this assessment roll is reflecting those decreases in value," said Christensen. "We have a huge inventory of homes for sale out there and this is just a sign of the economy."

The loss in value works out to about $61,900 per house, or a $600 lower tax bill.

Homeowners who are receiving tax reductions were notified by a letter from the Assessor's Office starting last Friday.

Property taxes are based on the property's assessed value. In California, owners pay 1 percent of the assessed value.

Under state law, the county can only reassess a property's value when the property changes hands or when an owner makes an alteration to a property, such as installing a new pool.

The 1978 tax law Proposition 8 says property must also be reassessed when its market value as of Jan. 1 drops below its current assessed value.

This year, the county reviewed 40,000 property records and lowered the value -- and taxes -- on 21,282 properties.

Last year, the county made 6,500 such reductions. The year before, just 100 property owners saw their values decline.

Since then, a record number of foreclosures have dragged property values down.

The county saw 112 foreclosures in 2006, according to Christensen. In the first five months of this year, 1,704 foreclosures were recorded.

Reporter Leslie Albrecht can be reached at (209) 385-2484 or lalbrecht@mercedsun-star.com.

Property values top out?

Assessed property values decline after upswing

04-05 $12,882,412,547

05-06 $15,251,514,207

06-07 $18,440,529,176

07-08 $20,534,600,191

08-09 $20,042,405,769