County assessor won't accept purchase price for appraisal

[Andrew Faukner]

Having a county assessor not accept our purchase price for a property tax appraisal is not a problem I anticipated.

While this is my first flip, I have had rental properties in California for many years. We bought a distressed property from a relative that had been abandoned for 15 years. We bought it for $400K in a neighborhood where comps are probably $800-900K. The house needs a new roof, and the leaks have caused water, and mold damage. There is termite damage, possibly to the rafters,  and we will need to have portions of the oak floors replaced. There is asbestos in some floor tiles. Pipes under the house have rotted out. The kitchen has been torn out. The electrical system needs repair to the extent we will need to have the house rewired. There is concrete damage to the driveway, and sidewalks. The front yard is just weeds. We are planning on holding the property for a year.

Now the problem is that the assessor will not accept our purchase price for property tax assessment. They say the lot by itself is worth $400K. They want us to provide an estimate for ALL of the work to be done. They won't give us an assessment value at this time. Has anyone encountered something like this where an assessor won't accept your purchase price for the property tax assessment? What do we do?

Andrew

[Bill B.]

A couple questions to think about rather than answers or maybe even advice. 

1) I assume you think you bought it for less than it’s worth as you intend to flip it for its true value after doing less than the difference in repairs. So you’d be hard pressed to tell em you paid exactly what it’s worth and are only doing the repairs to “break even[ and resell it. 

2) Does it really matter if you plan to sell in 3 months? Won’t the value will be reset again to the price the new buyers paid? Are you haggling over the value difference over 1/4th of a year? 

Good luck either way.  If you can make money in CA you can make it anywhere.