A Little Bit of Planning Can Help Make April Less Taxing

Property taxes are due in less than a week, on April 10. For many people who are also paying their income taxes right before the annual deadline, next week will be doubly painful in the pocketbook.

Just as there are ways to save on income taxes, some planning can help you save on your property taxes too. Property owners can save money by lowering their property tax assessments, or by taking advantage of postponements and special tax assistance available to some seniors and disabled property owners. And if your mortgage lender is paying your taxes for you through an impound account, there may be a possibility of paying your property taxes directly. Finally, planning ahead can help you avoid being one of the roughly 170,000 property owners in Los Angeles County who will face a 10% penalty because they didn’t pay their property taxes on time.

Property taxes are due promptly on April 10. That means any balance on property taxes not paid in person or postmarked by that date face an automatic 10% penalty, explained David Collins, Los Angeles County’s assistant treasurer and tax collector. On July 1, interest begins to accrue at a rate of 1.5% per month. You had best be sure that the check you write clears the bank. If it doesn’t, you will face a $49.85 penalty from Los Angeles County, plus the 10% penalty if you don’t end up paying your tax bill by the April 10 deadline.

Los Angeles County doesn’t currently accept credit cards for payment of property taxes. But Ventura County does--you can charge your property tax on either a Visa or Discover card. Because of the heavy penalties for late payments, you’re probably better off taking a cash advance on your credit card than missing the April 10 deadline.

There aren’t too many acceptable excuses for paying your property taxes late, Collins said. In times of military conflict, members of the armed forces can get property tax deferrals. Fortunately, there’s no need for that these days. There are waivers for a doctor-certified incapacity (which the tax collector does not like to encourage).

While property owners are advised to pay their property taxes on time, there are ways to save money.

* Property owners whose homes have gone down in market value can apply to the county tax assessor for a property tax reduction.

Property owners can begin by filing a claim directly with the county assessor’s office based on provisions in California law. The law allows owners to request that their assessment be adjusted if their property has fallen victim to misfortune or calamity--like a flood, fire, civil disturbance or earthquake. In limited cases, owners can also contest the “base year” assessment used to calculate successive tax bills. With sale prices of houses in the Valley having sunk back to 1987 price levels, these types of applications are accounting for the bulk of claims filed with the assessor.

“It’s real easy to request an adjustment of assessed value,” said Gary Townsend, chief deputy of the Los Angeles County assessor’s office. “Look at the assessed value on your bill and compare it to other properties selling in the neighborhood.”

Los Angeles County has a May 15 postmark deadline for filing these claims with the county assessor. The second option is filing an appeal of your tax assessment between July 1 and Sept. 15 with the county appeals board. The appeals form takes about five to 10 minutes to fill out, and all that’s required is the owner’s name, address, phone number and your estimate of value. Property owners can request that their appeal be heard before a hearing officer in any one of 10 locations around the county or before a board of three. Homeowners can either contest an unfavorable reply by the assessor to their claim for a reduction, or homeowners can make their first such request directly through the appeals process.

* Property owners who have suffered a so-called misfortune or calamity to their property may also qualify for a reassessment. There is a special form for this and all sorts of limitations apply.

* California residents who are 62 or older by Dec. 31, 1995, or are blind or disabled, can file for property tax postponement. The taxpayer must occupy the residence and have at least 20% equity in it. Also, the taxpayer can’t have a household income of $24,000 or more. Property owners who qualify for the postponement may qualify to defer payment of property taxes until they move, sell their home or die. The filing period for tax postponement is May 16 through Dec. 10. More information about property tax postponement is available by calling (800) 952-5661.

* Property owners who are 62 or older, or blind or disabled, may also qualify for help from the state of California in paying their property taxes if they have an annual income of $13,200 or less. Assistance comes from the state in the form of a return of money paid in property taxes. The filing period for tax assistance claims is May 15 to Aug. 31. More information about tax assistance is available by calling (800) 852-5711.

* Eliminating an impound account set up by your mortgage lender may be another way to save some property taxes. When a loan is made for 90% or more of the value of a residential property, lenders almost always require an impound account, where every month the borrower pays an amount additional to the mortgage for taxes and/or insurance. Some lenders require impound accounts for loans with less than an 80% loan-to-value ratio, said William M. Jacobs, president of GN Mortgage Corp. in West Hills and the incoming president of the California Mortgage Bankers Assn. Lenders generally pay only about 2% interest on these trust-fund-like accounts.

About 20% of property taxes in Los Angeles County are paid through impound accounts, according to the county tax collector. Many property owners who have impound accounts don’t necessarily need them, however.

“Homeowners should have a conversation with their lender if the value of the property or the equity position of the borrower has gone up,” said Patrick Chambers, director of property tax at Arthur Andersen LLP, which has offices in Woodland Hills. “I prefer to make my own tax payments and have the money in my own pocket earning interest for me during the course of the year.”

If property owners are delinquent for more than a year, they transition into default status and the county imposes financial penalties, department expenses and 18% annual interest. Owners can remain in default for about five years, during which time they can work out a deal with the tax collector to pay their taxes. If the taxes still aren’t paid, the tax collector may exercise power to sell the defaulted property at an auction.

More information about tax assessments in Los Angeles County is available by calling (213) 974-3211 or by visiting one of many offices located throughout the county--including Downtown Los Angeles, Van Nuys and Chatsworth. The number to call for the Ventura County assessor is (805) 654-2181.