Decline in Value

In 1978, California voters passed Proposition 8, a constitutional amendment to Proposition 13 and implemented as Revenue & Taxation Code 51(a)(2) that allows a temporary reduction in assessed value when real property suffers a decline in market value. A decline in market value occurs when the current market value of real property is less than the current assessed (taxable) factored base year value as of the lien date, January 1.

Real property may decline in market value from one lien date to the next lien date; however, it will not benefit from a lower assessment unless its market value falls below the current factored base year value. The decline in value is typically temporary and may be the result of changes in the real estate market, the neighborhood, or the property itself.

A property with an assessed value reduced due to a decline in market value receives an annual review to determine its lien date value. The assessed value of a property with a reduced value in place may increase each lien date (January 1) by more than the standard two percent maximum allowed for properties assessed under Proposition 13. Value reduced under R&T Code Section 51, is not considered base year values, they are temporary values and the 2% increase restriction does not apply. However, unless there is a change in ownership or new construction, a property’s assessed value can never increase above its Proposition 13 factored base year value, after adjusting for the annual increase.

Reductions in assessed value under Decline in Value (R&T Sec. 51) are temporary and reviewed annually until the factored base year value is again lower than market value and then the factored-base-year value is reinstated. This is not a permanent reduction to your original base year taxable value.

Request an Informal Assessment Review

The Assessor’s Office mails Notifications of Assessed Value in July. If, after you receive your Notification, you disagree with your property’s assessed value, you may contact the Assessor’s Office to request an informal review of the value.

If you still disagree with your assessed value after discussing it with Assessor’s Office staff, and it is between July 2 - September 15, you can file a formal assessment appeal with the Office of the Clerk of the Assessment Appeals Board.

Frequently Asked Questions

What if my current assessed value is below market value?

The Assessor is required to enroll the lesser of your factored base year value (assessed value) or the market value. For example, if the market value of your property (what you could sell your house for) as of January 1st lien date is $500,000 and your assessed value is $600,000, the Assessor would enroll the $500,000 as your taxable value for that year only.

What does Decline in Value (R&T Sec. 51) say?

Under Decline in Value (R&T Sec. 51), the Assessor may review the market value as of January 1, and enroll for the following tax year the lesser of the Factored-Base-Year Value or Market Value Decline in Value (R&T Sec. 51)

Do properties other than single-family residences qualify?

Yes, all real property qualifies.