What do you need to tell a tax assessor during a reassessment?

Question

I am in a house hack where I live in one unit and rent out the other. When I purchased the property, as always, it triggered a tax assessment; however, I did not hear from the tax assessor responsible for the reassessment for approximately 6 months after closing. By the time they called, we had done considerable work to the property and were about to rent out one unit. The tax assessor started asking me all sorts of questions about the current condition of the property (what renovations had we done, did we have any tenants, did we plan on having any tenants, etc). I kept my answers as vague as possible without lying, but I am glad they called when they did and not a month later because we would have had a tenant by that point, and I am not one to lie. My understanding is that tax assessments are supposed to be based on the value of the house at the time of sale. My general question is: what am I legally obligated to tell a property tax assessor? More specifically:

1 - Is it ok to only answer questions that reflect the condition of the house at the time of sale, or do I have to disclose everything about the current condition no matter how long it has been since I purchased the property?
2 - Do I have to tell them if I have tenants if I live on the property, even if there were no tenants on the property when I purchased it?

Thanks for the help!

• 1 - Is it ok to only answer questions that reflect the condition of the house at the time of sale, or do I have to disclose everything about the current condition no matter how long it has been since I purchased the property? 
• 
• 2 - Do I have to tell them if I have tenants if I live on the property, even if there were no tenants on the property when I purchased it?

Thanks for the help!

Scott M. · Answer

Please cut my taxes in half.

Baird King · Answer

@Lynnette E. - Ah I see.  That is the first time I have heard that perspective, but it makes sense. I am looking hard for a 2-4 unit property at the moment nearby in Ventura, but am pretty adamant that the units feel very much like separate homes for that very reason (e.g. separate structures, separate driveways, separate yards, etc).  Hoping that those properties appreciate similarly to SFR.  Steering clear of mini-apartment buildings.  Thanks for the insight!

Lynnette E. · Answer

For a lot of places in CA the wealthy will pay a premium for a nice big house and do not want to be near lower income people who are more likely to rent a duplex type house.  With the housing shortage, those bigger properties are worth more and going up in value faster than the duplexes.  Many duplexes actually get torn down so someone can built their big house.  Plus investors buy the duplexes that remain as duplexes and they often don't want to over pay.

I would think that a large single family with an ADU would be worth more than either a single or duplex.

BP fans seem to like the small multi-family because it can bring in a larger income than a single family and they think has less risk, less maintenance.  Personally I have both and my single families have much less turn over, less maintenance, and better quality of applicants.  Plus with single family all the lawns, utilities, etc. are the tenants responsibility.  With the small multi the common areas and some utilities, and trash  are my time and cost.  When the trash is a single family and some dog knocks it over the tenants pick up the mess.  At the multi, they call me.  That trash belongs to no one.  The small multi does bring in $, but it take a lot more effort from me.

Baird King · Answer

@Scott M.. -wish I could help

Baird King · Answer

@Colleen F. @Lynnette E. - Thank you both for your responses. Super helpful!  Lynnette - curious why you say we would be better off as a duplex?  The property is an SFR with an ADU. All else being equal (condition, sq footage, etc), wouldn't multi property typically be valued higher than SFR?

Lynnette E. · Answer

If you got permits for anything they will reassess it again after they establish the sale price value with the improved value.  So you should tell them what it was like at the time of sale--for structural things, not trash/hoarding/landscape type stuff.  Trash and hoarding and landscaping type of stuff will make them say the house is worth more than you paid and since the trash is gone, etc. they can tax you more.  THEN after you get permits say that under permit XXX I did whatever.  They will increase the value based on what you did.

Your risk with the tenants part is --where the property is would one big house be worth more or a duplex?  Right now they are taxing it as one big house.  You likely will be better off in CA as a duplex.

This will continue as you make changes.  There will be an end though and eventually the value will be set.

Colleen F. · Answer

@Baird King if it is a duplex or  < 5 units they will assess it on comparables. If it > 5 units they normally use income.  If you give them information you need to give them accurate information on condition now but you can downsell by not providing detail. They may just come see it.    Now you are in California so no idea if there is a specific impact of that, they may care.

What do you need to tell a tax assessor during a reassessment?

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