In California, the average property tax is 0.79% which is low compared to the national average of 1.19%. Property assessment is required before one can be able to pay property taxes with the prevailing property interest. In the beginning property value in California are based on the purchase price and the value is further assessed every year based on the rate on inflation but there is an increase cap of 2%. The proposition 13 which was passed in 1978 lays down the guidelines on how property is assessed for taxation purposes. The county board of assessors are responsible for carrying out property reassessments in California. In California people who owns luxury items pay the personal property taxes but the proposition 13 does not apply on personal property which attracts a different taxes (Anderson, 2014).
Property Valuation Standard in California
In the United States and California state the International Valuation Standards are used in property valuation which seeks to promote uniformity in property valuation. The International Valuation Standards 2017 which sets the relationship between the valuers and the property owners, best practices, valuation steps and reporting approach to be followed by the valuers. The IVS seeks to promote uniformity and standardization of valuation activities which is an important factor in the capitalist economy (Ellis, 2002).
Cycles and Classification System
In California state properties are assessed yearly due to the need to meet tax obligations and also before property can be sold to another party. Property in California is classified as either real property or personal property (Sager, 1957). Real property covers possession of land, mines, minerals, quarries, buildings and structures, fixtures or fences erected on land. The personal property is a class of property except real property which is tangible or intangible. The classification of property is important because the valuation of property for taxation purposes vary depending on the property (Mikesell, 2018).
Property Tax Relief in California
Property tax relief programs exist in California but the qualification for the programs is a complex process which is authorized by the assessor office after the property owner files the required claim form. Tax relief on properties covers the new constructions which is not included in the reassessment if it included the modification of an existing structure. The disaster relief is another form of property relief in California that covers property damaged by disaster with the necessity to reassess the property to reflect the damage. Property transfer from parents to children, property owned by seniors and disabled people and solar energy systems in property are not included in the property worth as a tax relief (Anderson, 2014).
Property Tax Dislike Reasons
Property tax is the most hated type of tax due to many pertinent issues such as the lack of progressiveness in property tax because it has a flat value. Another reason is that it is difficult to change one's property tax and it is always rising every year especially due to inflation. Lastly, different property attracts its individual tax which makes it a significant problem for people who owns multiple property (Rosengard, 2012).
Anderson, J. E. (2014). Income Based Property Tax Relief: Circuit Breaker Tax Expenditures. Public Finance and Management, 14(2), 245-273. Retrieved from https://www.lincolninst.edu/sites/default/files/pubfiles/2278_1617_Anderson_WP13JA3.pdf
Ellis, T. R. (2002). United States and international valuation standards-the future. TRANSACTIONS, 312. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.424.1211&rep=rep1&type=pdf
Mikesell, J. (2018). Fiscal administration: Analysis and applications for the public sector (10th ed.). Retrieved from https://redshelf.com/
Rosengard, J. K. (2012). The tax everyone loves to hate: principles of property tax reform. Harvard Kennedy School wp, (10). Retrieved from https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/files/MRCBG_FWP_2012_10-2012_Rosengard_Tax_Reform.pdf
Sager, W. H. (1957). Property Classification for Taxation. Va. L. Rev., 43, 1325.
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