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Homeowners overpaying property taxes

By Mike Freeman
STAFF WRITER

As many as one-quarter of San Diego County homeowners may be paying too much property tax because their homes are worth less now than when they bought them, according to study by a San Diego software company.

EasyTaxFix.com, a start-up that offers a Web-based property tax appeal service, conducted the study using county data provided by La Jolla-based MDA DataQuick. It estimates that one in four households is potentially over-assessed.

Though they haven't seen the study, officials at the county assessor's office say EasyTaxFix's calculations are probably about right.

The county did its own analysis recently, said Jeff Olson, chief of assessment services. It found that 28 percent of all county properties changed hands in the past four years – when values jumped sharply during the housing boom.

“If you consider that to be January 2004 to present, you're looking at 28 percent of the properties in the county that could be candidates for a reduction in value,” Olson said.

Since Proposition 13 passed in 1978, California homes are assessed based on the price paid by the purchaser.

Coming tomorrow in Smart Living: A step-by-step guide to filing your own property tax appeal and what you need to know about companies that offer to do it for you.

That assessed value increases up to 2 percent a year, and property taxes are calculated as a percentage of the assessed value – generally 1.1 percent before special assessments.

Home prices peaked in San Diego County in November 2005 but have recently been in sharp decline as foreclosures flooded the market. The widely followed Standard & Poor's/Case-Shiller Home Price Index showed home prices in San Diego County fell 25.8 percent in August from a year earlier.

EasyTaxFix estimates that the average potential savings for filing a property tax appeal exceeds $1,000 annually.

The assessor tracks 975,000 parcels in the county. Of those, about two-thirds are residential. The rest are commercial buildings or other nonresidential lots.

Of the roughly 645,000 residential parcels, about 162,000 could be over-assessed.

The county has already reduced values on about 80,000 parcels this year – including both residential and commercial properties, said Olson of the assessor's office.

Despite plunging home values, only 17,500 county property owners have appealed their property tax bills so far this year. The deadline for filing an appeal is Nov. 30.

Homeowners can appeal their assessed value for free. Forms can be picked up at any assessor's office in the county. They also are available for download at www.SDARCC.com, Olson said.

EasyTaxFix charges $40 to perform the same service. But it provides a Web site where users can type in their address and get a calculation, for free, of whether their home is over-assessed.

Co-founder Adam Berkson said using the Web site can save homeowners time because it provides a host of information – including comparable sales gleaned from county deed records – that are necessary for a successful appeal.

“For $40, you can do it pretty quick, in five minutes,” he said. “It will probably save you three or four hours in time.”

Berkson founded the company with his brother, Jeff. Both have day jobs running an analytics software company, Metric Tracker, in San Diego. They got the idea for EasyTaxFix after Adam Berkson appealed his property assessment for his Point Loma home.

Adam Berkson said the county's appeal process is not as simple as it appears. For example, the county requires three comparable, nearby sales. But those comparable sales aren't necessarily the three most recent sales. They must have occurred before the end of March, Berkson said.

State law requires assessors to set property values of homes as of Jan. 1. So even if they appeal now, homeowners are challenging their home's value as of the first of the year. Therefore, comparable sales after March are considered invalid.

Also, it's often difficult for novices to figure out what's a comparable sale, Berkson said, because houses vary in size. The EasyTaxFix Web site provides users with comparables on a price-per-square-foot basis. The site also aims to provide 10 comparable sales, so there are plenty of choices.

The Berksons launched the site in August and hope to establish it in San Diego County, then expand to other parts of California and eventually go national.

“At least for the next couple of years, this will be very top of mind in terms of the whole country,” he said.

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Mike Freeman: (760) 476-8209; mike.freeman@uniontrib.com