Almost a quarter of Santa Clara County's property owners are set for a jump in their property tax bills, thanks to this year's boost in the residential real estate market.
During the real estate market collapse, 136,000 property owners' residences assessed below their purchase prices, according to the Santa Clara County Assessor's office.
The market value of 47,000 of those properties have completely erased that lost value and now exceed their original price. Another 81,000 properties will regain part of their lost value, officials said.
With the increase in market value, assessed values increase as well, leading to a bump in property taxes.
Mountain View Whisman and Los Altos both will see an 8 percent increase in property tax revenues in their elementary school districts.
"The market solely determines whether the assessed value of a property is reduced or restored." said Santa Clara Assessor Larry Stone.
California has two propositions used to calculate property taxes. Proposition 13 prohibits property taxes from increasing by no more than 2 percent a year measured from the base year value. However, Prop 13 no longer applies if the assessed value of a property is lower than current market value, which is where Proposition 8 comes in. Homeowners who have property that is lower than the purchase price have their property tax reassessed at the current, lower market value.
Stone said that the tax hikes aren't necessarily a bad thing.
"The increases in assessed value are clear evidence that Silicon Valley is roaring out of the economic abyss created by the recession," he said. "Unemployment has dropped to 7 percent, faster than the nation or the state. The NASDAQ is soaring. Apartment rents have reached record levels with single-family homes close behind. It was inevitable that property taxes would follow."
"While increases in property taxes are never welcome, this is actually very good news for our local economy, especially for homeowners. It means the value of most families' single most valuable asset, their homes, is once against regaining solid equity lost in the collapse of the residential housing market."
Stone said his office is in the process of sending out annual notification letters that will inform homeowners of the current assessed values. That will help identify the geographic areas that can be expected to received the largest increases in property taxes.
"Santa Clara County is one of only 10 counties in California to provide this early notice," said Stone.
Stone said he encourages homeowners to use the on-line tool at www.sccassessor.org to help them to understand which comparable sales were used to determine the assessment of homes. Property owners will also be allowed an informal review of their assessed value after they've received their notice.