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As Prices Rise, So Do Property Taxes

As the housing market improves, many California homeowners will see the downside of the recovery; an increase in their property taxes.

Many homeowners believe their property taxes are limited to increases of no more that 2 percent annually because of Proposition 13, the landmark voter initiative approved in 1978. However a companion Proposition 8 passed the same year allows assessors to temporarily reduce assessments when real estate values go down, and many homeowners successfully petitioned for such reductions.

However the Proposition also allows increases of greater than 2% 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 had never dropped.

The San Jose Mercury News reported that more than 37,000 homeowners in Santa Clara County alone are sing their property taxes rise by more that 2 percent his year because of the regions rebounding real estate market. About 15,000 property owners in Alameda County and about 3,350 in San Mateo County are in the same position, officials said.

The trend is helping those counties financially by allowing them to collect more property taxes, but is an unpleasant surprise to some homeowners who were happily watching their property values rise.

21957 Raintree in gate guarded community of Sycamore Creek Lake Forest just sold for full price.