Proposal A placed a cap on increases in taxable value for every parcel. There is an exception for property whose ownership has transferred. Beginning with the 1996 tax year, properties where ownership has transferred are "uncapped". When ownership of the property is transferred as defined by law, the parcel shall be assessed at the applicable proportions of current true cash value (50%). This value is not 1/2 the selling price. When the property transfers, the assessed value becomes the taxable value for the following year. It is then recapped until the next transfer of ownership.
Example: The following example is a property with no physical changes. The true cash value (TCV) of the property was $100,000. Prior year's SEV was $50,000. Last year's taxable value was $49,000. The year following the transfer of ownership, the TCV is $110,000, the new SEV is $55,000 and the new "uncapped" taxable value is also $55,000. Your taxes for the year will not be what they were the year you purchased the property; once the year is over your property becomes uncapped and your new values begin.
The SEV or State Equalized Value is half the true cash value of the property. This value is what is determined to be Market Value. There is no limitation on the percentage that is increased or decreased each year. Those values are determined by a 24 month sales study on what is happening in your neighborhood. Therefore, ½ of your purchase price will not become your new SEV. That process is called chasing sales and it is illegal. Your State Equalized value can also be lowered if you remove a building or increased if you add on to your property.
Taxable value is what your property taxes are based on. There is a limitation on the percentage in which the property can increase; 5% or the IRM(inflation rate multiplier) also known as the cost of living, whichever is lower (PROPOSAL A OF 1994) The Taxable value can also be increased if you add on to your property, or decreased if you removed buildings/structures from your property.
***ASSESSED VALUES CAN GO DOWN AND YOUR TAXABLE CAN GO UP, DEPENDING ON THE COST OF LIVING***