As the housing market improves, homeowners will see a downside of the recovery: an increase in our property taxes.
Many homeowners believe their property taxes are limited to increases of no more than 2 percent annually because of Proposition 13, the landmark voter initiative approved in 1978.
However, Proposition 8, a companion ballot measure that passed the same year, allows assessors to temporarily reduce property assessments when real estate values go down, however it also allows increases of greater than 2 percent when values go back up. The 2 percent limit set by Proposition 13 doesn’t apply until the property’s value reaches the level it would have hit if the real estate market never dropped.
While the increase in taxes is an unpleasant surprise to many homeowners who are very happily watching their property values rise, it is good news for Alameda and Contra Costa counties. Our counties will be helped financially by allowing them to collect more property taxes.
Hopefully our counties and the state can budget more wisely this time around and perhaps even put money into the “savings” account.