SAN JOSE (AP) — Tens of thousands of California homeowners are seeing the downside of the recovering real estate market: unexpected jumps in their property tax bills.
Many homeowners believe their property taxes are limited to increases of no more than 2 percent annually because of Proposition 13, the landmark voter initiative approved in 1978.
But fewer property owners know the details of Proposition 8, a companion ballot measure that passed the same year.
Proposition 8 — not to be confused with the 2008 ballot measure that banned gay marriage in California — allows assessors to temporarily reduce property assessments when real estate values go down. But it allows increases of greater than 2 percent when values go back up.
The 2 percent limit set by Proposition 13 doesn't apply until the property's value reaches the level it would have hit if the real estate market never dropped.
The San Jose Mercury News reports that more than 37,000 homeowners in Santa Clara County alone are seeing their property taxes rise by more than 2 percent this year because of the region's rebounding real estate market. About 15,000 property owners in Alameda County and about 3,350 in San Mateo County are in the same position, officials said.
The trend is helping those counties financially by allowing them to collect more property taxes. In Santa Clara County, assessed values rose 3.25 percent to $308.8 billion this year, the newspaper reported.
But the bigger tax bills are a surprise blow to homeowners who have been happily watching their property values finally go up.
Karen Kreshel, who bought a home with her husband in San Jose's Willow Glen neighborhood in 2007, said their property taxes are expected to rise 9.4 percent this year.
"It's a double-edged sword," Kreshel said. "The value is going up and so are my property taxes, even though it's still below what I had to pay for it ... It's part of being a homeowner."