Annual Report 2019 - 2020

What is Proposition 8?
Proposition 8, passed by California voters in November 1978, entitles property owners to the
lower of the fair market value of their property as of January 1, 2019 (lien date), or the factored
base year value. The factored base year value is the assessed value as determined at the time
of purchase or construction, increased each year by no more than two percent or the California
Consumer Price Index (CCPI), whichever is lower. When the market value of a property
declines below the factored base year value, the Assessor is required to proactively reduce the
assessed value to reflect the lower fair market value of their property.
Q. I am remodeling my home,
will the improvements be
reassessed?
A. Remodeling that does not
involve adding to the size
of the structure or to the amenities provided
within the structure is generally not considered
new construction and is not subject to
reassessment. The exception is those situations
where the remodeling is so extensive
as to constitute the “substantial equivalent”
of a new structure. If a remodeling project is
extensive, the property owner is encouraged
to contact the Assessor’s staff in advance by
email at rp@asr.sccgov.org or at (408) 299-
5300, to obtain a better idea of how the project
will be treated for assessment purposes.
Q. How many properties are still protected by
Proposition 13, passed by the voters in 1978?
A. All properties in Santa Clara County and
throughout California receive the full protections
and benefits of Proposition 13, whether
a property was purchased last year or in 1975.
The base year value is established at the time
of purchase or new construction, and increases
in the assessed value are limited to an inflation
factor of no more than 2 percent annually.
Q. What happens when a property transfers
ownership?
A. The Assessor determines if a reappraisal is
required under State law. If required, an appraisal
is made to determine the new base value
of the property. The sales price, if known,
is a strong indicator, but not the sole factor in
setting the value. The property owner is notified
of the new assessment and has the right
to appeal both the value and the reappraisal
decision. The reappraisal of property acquired
by inheritance from an estate or living trust
occurs as of the date of the death of the former
owner, not on the date of distribution to
the beneficiary. An assessment will be made
in the name of the estate even if the property
is sold rather than distributed to the heirs.
Q. Why are you taxing my business assets?
A. The State Constitution says ALL property
is subject to property tax. Most people
are familiar with the property taxes on their
home. Similarly, the assets of a business are
subject to assessment. Assessable business
assets include all machinery, office furniture
and equipment, non-licensed vehicles, process
or trade fixtures, and any inventory that
is out on rent or lease on January 1.
Q. Appraising and Assessing: Is There a
Difference?
A. Yes. An appraisal is the process of estimating
value. Most taxpayers assume
the market place exclusively determines a
property’s assessment. However, the market
value may be only one component in the
process of determining the property’s assessed
value. While at least one of the three
approaches to value, (1) sales comparison,
(2) income, and (3) cost, is always considered
in the appraisal of a property, the Assessor
is required to incorporate additional
factors when determining when and how to
assess property under State law. Frequently,
court decisions, laws, and rules promulgated
by the State Legislature and State Board of
Equalization amend the assessment process,
and redefine what, when and/or how the
Assessor must determine the assessed value
of a property.
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Santa Clara County Annual Report 2019