A Look at Property Value Assessments Increase

LOS ANGELES-Every December, the California State Board of Equalization announces the inflation factor for the coming year's property assessment roll. The factor is determined using the percentage change (rounded to the nearest one-thousandth of one percent) in the California Consumer Price Index, from October of the prior fiscal year to October of the current fiscal year, but cannot exceed 2%. The 2013 CCPI percentage change was 1.02, resulting in an assessed value increase of 2%.

For the 2014 assessment roll year (July 1, 2014-June 30, 2015), the inflation factor in California for 2014 is 1.00454, rather than the typical 1.02, explains Dallas-based global tax services firm, Ryan.

In 2014, California will not see the typical 2% increase in assessed values, but instead the increase will only be .454%. This is only the seventh time since Proposition 13 was passed in 1978 that the inflation factor has been less than 2%, says the firm.

GlobeSt.com caught up with a local expert to get a better understanding of the subject and what it means to real estate investors. Scott Farb, partner of Cohn Reznick, tells GlobeSt.com that “this is indicative of the fact that inflation doesn't appear to be a concern for real estate investors for the near future.”

According to Farb, “This is despite the fact that the overall economy is improving and interest rates are expected to rise over the next year or two.”

Clearly, he adds, “there is a mixed message here on the overall optimism as to whether or not the economy will continue to improve given the overall uncertainty and political environment we are currently facing.”