How to achieve larger refunds and save property taxes forever!

Case study – How SSCPA helps our clients achieve larger refunds and save property taxes forever after “Base Year” transfers

We just resolved a case in Santa Clara County which was a reassessment after a transfer of a 50,000 square foot office building to a family LLC that was a greater-than-50% change of ownership.

The assessor initially valued the property at the time of transfer at $10,990,000, so we filed an appeal.  Once the hearing date was determined, we were assigned a different Santa Clara County appraiser who offered a reduction to $10,400,000.  He attempted to persuade us by suggesting this was a good deal because it represented a $590,000 reduction in assessed value.

However, we still thought the value should be lower, based on market rents, capitalization rates and vacancy issues, as well as recent sales of office buildings in the area.  We presented our full workup on the value to the county appraiser at $9,500,000 and he agreed to discuss it with his supervisor.

Accepted OfferAfter discussion, the assessor agreed to stipulate to a value of $9,600,000 and we accepted.  This is a good example of what can happen if you represent yourself and do not have a clear answer or valuation to present to the assessor – instead of countering with facts surrounding the property and market, most people would be happy to have achieved the $590,000 reduction.

However, our representation resulted in a reduction of $1,390,000, an additional $800,000 reduction compared to the first offer.  This reduction is permanent under California Proposition 13, which requires that a new “base year” value is established upon transfer, and the assessed value cannot be increased in future years above an inflation factor (no more than 2% per year).   This means that the additional reduction that we achieved will save the family LLC a minimum of $9,000 per year for as long as it owns the property.  Our fee is a percentage of the savings for 2 years.  Not a bad deal.

Base year transfers occur when there is a sale, a transfer of ownership of more than 50%, or when there is new construction.  These new assessed values should always be reviewed.

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