Estimated Property Tax Adjustment
Estimated Property Tax Adjustment

INSTRUCTIONS
1.  
Print and fill out the following worksheet
2.  Bring the completed worksheet with you to the pre-application meeting

ESTIMATED PROPERTY TAX ADJUSTMENT WORKSHEET GUIDE

STEP 1: DETERMINE ANNUAL INCOME OF PROPERTY.

DESCRIPTION

CURRENT

EXPLANATION

1.       Monthly Rental Income

$

Even if the property is owner-occupied, an estimated monthly rental income is needed as a basis for this formula. Remember to include all potential sources of income (i.e. filming, advertising, photo-shoots, etc.)

2.       Annual Rental Income

$

Multiply line 1 by 12 months

STEP 2: CALCULATE ANNUAL OPERATING EXPENSES.

3.       Insurance

$

Fire, liability, and other insurance

4.       Utilities

$

Water, gas, electric

5.       Maintenance

$

Maintenance includes: painting, plumbing, electrical, gardening, cleaning, mechanical, heating repairs, structural repairs, and other repairs

6.       Management

$

Standard fee (usually 5% of rent)

7.       Other Operating Expenses

$

Security, etc.  Provide breakdown on separate sheet

8.       Total Expenses

$

Add lines  3 through 7

STEP 3: DETERMINE ANNUAL NET INCOME.

9.       Net Total

$

Line 2 minus line 8

STEP 4: DETERMINE CAPITALIZATION RATE.

10.   Interest Component

          %

As determined by the State Board of Equalization for 2012.

11.   Historic Property Risk Component

          %

Single-family home = 4%

All other property = 2%

12.   Property Tax Component

         1%

.01 times the assessment ratio of 100%

13.   Amortization Component

(reciprocal of life of property)

          %

If the life of the improvement is 20 years, use 100% x 1/20 = 5%. Wood-frame typically 20 years, masonry typically 50 years

14.   Total = Capitalization Rate

          %

Add lines 10 through 13

STEP 5: CALCULATE NEW ASSESSED VALUE.

15.   Mills Act Assessed Value

$

Line 9 divided by line 14

Example: line 9 divided by .15 (15%)

STEP 6: DETERMINE ESTIMATED TAX REDUCTION.

16.   Current Tax

$

General tax levy only, do not include voted indebtedness or other direct assessments

17.   Tax under Mills Act

$

Line 15 multiplied by .01

18.   Estimated Tax Reduction

$

Line 16 minus 17