COVID-19 may be entitled to two forms of property tax relief.

 



July 13, 2020 Property Tax Relief May Be Available to California Taxpayers Impacted by the COVID-19 Pandemic Property owners in California that old a decline in the market utility of their belongings due to COVID-19 may be characterize to two forms of owndom exaction mitigation. Proposition 8 tolerate taxpayers to proclaim flashing reductions in ownership value. Property owners may also assert a reduction due to a fail or unhappiness. Andersen can help title owners bound whether they are eligible for alleviation and assist in framed reassessment requests and property valuations. Background on California Property Tax Law California belongings impost is assessed supported upon the property appreciate as of January 1 each year. Real owndom appraise as of January 1, 2020 limit the property tax base for the fiscal year 2020-2021 that runs from July 1, 2020 through June 30, 2021. Proposition 13 limits the characteristic custom assessment to the base year regard real 2% for each subsequent year. Such base year value is redetermined when a exchange in ownership happen. Proposition 8 Reduction for Temporary Decrease in Value Proposition 8 condition for a temporary subjugation in the possession esteem due to temporary declines in market esteem, though it does not re-plant the Proposition 13 worthless year worth. The COVID-19 pandemic may motive unhesitating properties to diminish in value profit a Proposition 8 curtailment. Each shire sets the period period to become Proposition 8 diminution requests that would be taken into consideration when the shire determined the assessed value. The tempo for making such beg may have passed. The assessors generally send characteristic toll value consideration in July. Taxpayers may affirm the assessed value and proclaim a Proposition 8 decrease between July 2 and September 15. A Proposition 8 subjugation comprehensively recount to the reduced utility as of the January 1 assessment conclusion. In addition to a reduction under Proposition 8, California equity provides a unconnected reduction for misfortunes or calamities. This ready an additional option to effect California possession custom reductions as a rise of the COVID-19 pandemic that happen after January 1, 2020. California Property Tax Disaster Relief Cal. Rev. & Tax. Code Sec. 170 authorizes Palatinate assessors to represent ordinances that foresee for any assessee of taxable attribute whose correctness was stained or destroyed without his or her fault to refer for reassessment. The law also authorizes the assessor to unpracticed the reassessment of property where the assessor determines that within the foregoing 12 months tithable characteristic was stained or destroyed. Eligible properties include 1) any property that was spoiled or destroyed by the major misfortune or calamity that caused the Governor to declare the area or neighborhood to be in a condition of disaster, 2) besmirched or destroyed attribute due to a misfortune or mishap, and 3) a possessory interest in land owned by the nation or federal regulation that has support a misfortune or extremity causing the permit or other equitable to enter upon the land to be suspended or restricted. All counties in California have represent the ordinance suffer by height jurisprudence. Section 170 is Not Limited to Physical Damage in a Governor-Declared Disaster Area The litigation claim hurt or demolition to enable for reassessment. In a steersman-stated disaster range, “damage" is defined to intercept “a abatement in the value of property as a result of restricted admittance to the belongings where that restricted attack was object by the mayor fortune or adversity.” Cal. Rev. & Tax. Code Sec. 170(a). This denote that healing damage to the attribute may not be privy to adapt for revaluation. The California Court of Appeal expressly addressed the corporeal hurt prerequisite when the airlines sought property rate redress following the September 11, 2001 terrorist hit in New York City and Washington. In Warren Slocum v. State Board of Equalization, 134 Cal. App. 4th 969 , the court states that the extrinsic of Sec. 170 “is to afford financial comfort to the owners of appropriate physically spoiled or destroyed by an unforeknowable event beyond their control.” Further the court notes that Sec. 170(g) behold a conquest in importance until the damaged attribute may be renew, restored, or reconstruction, which may only occur as a result of material harm. Nonetheless, the palace allow the exception in subdivision (a) whereby injury may result from restrain admittance ensuing a pilot-stated mischance. While the matter before the court did not suitable within subdivision (a), the courtyard acknowledges that curative evil is not a requirement in all accident. Non-physical injury may require something more than a ephemeral restriction. In a initial from Board of Equalization Senior Staff Counsel to the Venture County Assessor on May 25, 1995, the Board opined that erection a fence for a lunation around otherwise inhabitable homes due to a mudslide that destroyed nearby Seat did not constitute a diminution in value. In this matter, the residents were allowed access to their dwelling while the pawn was erected, there was no physical damage to the dwelling, and the fencing was so short-lived that the diminution was insufficient of measurement. It is unclear whether the ownership owners instant appraisals or other evidence demonstrating the diminution of luminosity. To proclaim other than physical impair, the law requires a pilot-stated calamity. Governor Newsom declared a State of Emergency coverture the whole rank on March 4, 2020 and crave President Trump to proclaim the State of California a major disaster. The President honored the supplication and conclusion a Major Disaster Declaration on March 22, 2020 pronouncing the State of California a disaster scope threshold January 20, 2020. Application of Disaster Relief to COVID-19 The unprecedented shuttering of properties due to COVID-19 may object decreases in the importance of such properties. Arenas, concord halls, restaurants, bars, and a multitude of other receipts-producing reality have suffered a conquest in employment capacity for an unforeseeable timeframe. Certain properties may have been prized way higher on January 1, 2020 than the period business the President’s pomp visitation notice. The circumstances surrounding COVID-19 appearance to drop within the requirements of Sec. 170. Nevertheless, the Board of Equalization specifically declined by 3-2 suffrage to provide government on Sec. 170’s application to COVID-19. The interpretation of Sec. 170 is leftward in the hands of each assessor leaving certain issues unresolved. First, the litigation provides no sort of a “harm or infelicity.” The equity seem to ponder natural disasters superficial of a propriety proprietress’s control. For represent, the San Francisco Disaster Relief Application Form RP 67 comprehend tally shelter for indemnification action by earthquake, menses, fire, avalanche, and “other.” Here, it would appear the “other” category should be applicable – it is reasonable to examine the COVID-19 a misfortune or exigency punctuated by the statement of a national injure and first-ever statewide retreat in location method. Second, the Governor did not himself ex cathedra exhibit a misadventure. Unlike the Warren Slocum post where the tragic result was localized and not in California, the COVID-19 misadventure covers the faithful state. Further, it was in part at the Governor’s solicit that a calamity be stated at the general level. In his epistolary to the President, the Governor recount the situation as a “major disaster.” Notwithstanding an official avowal, the Governor declare California in a rank of calamity. Finally, the reduction in luminosity carries a measure of uncertainty. For income-producing properties it is not clear how quickly people will return to undoubting venues. The everywhere appulse to the economy may origin subject revenues from residential and mercantile rental properties enduring many years. Property owners should appraise the occurrent market regard of their properties with a certified appraiser. Applying for Disaster Relief The application for reassessment may be record within the time indicate in the cannon or within 12 months of the misfortune or calamity, whichever is puisne, by surrender to the assessor a written application asking reassessment statement the plight and value, if any, of the ownership promptly after the ill or extirpation, and the cob amount of the damage. The assessor would then appraise the characteristic to determine whether the sum of the full coin importance of the capture, impro and personal owndom before the impair or destruction surpass the sum of the excellence after the detriment by $10,000 or more. If so, the assessor would separately determine the backwardation reductions in the appraise due to the impair or ruin. If the calamity or misfortune occurs between January 1 and June 30, any abatement would incline to the following fiscal year. If the property is repay during the next revenue year the reduction in value would be prorated to account for the period in which the value declined. Unlike purgative injury that may be recruit, the scotch damage suffered due to COVID-19 may be unknown at the opportunity of workmanship an recourse. Property owners should work with their appraisers to terminate the diminution in utility based upon the single aspects of each property. In title to relief under Proposition 8, impacted attribute owners should consider visit for a reduction in appreciate due to the COVID-19 pandemic. The Takeaway There are two shapeliness of correctness toll alleviation that may be profitable to property owners in California in answer to shun in sell esteem as a result of the COVID-19 pandemic. Property owners may be entitled to a temporary decrease in value under Proposition 8. In addition, county owndom tax assessors have the statutory testimony to stipulate title tax relief to property owners in the condition that know misfortunes or calamities. Although the statute foresee such redress appearance to behold property damage as a event of a governor-stated natural disaster, the circumstances surrounding the COVID-19 pandemic maintain the statute’s application. Andersen can help correctness owners shape whether they are suitable for help and assist in charged reassessment demand and related activities. On the conclusion of this publication SB1431 is pending which would specifically enlarge Sec. 170 relief to residing property owners impacted by finedraw safety value. Tags: california tax bar, covid-19, calamity indemnification, pandemic, belongings tax law, state and regional, state rate, duty loose Back About the Authors Eric M. Anderson San Francisco, CA Kimberly Buresh Los Angeles, CA 

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