CA timeshare property taxes

I just got off the phone with the Riverside County Property Assessor to resolve an assessment question on my Shadow Ridge tax bill. I asked why they do individual bills rather than one bill to the HOA. The answer:

California allows the developer to request individual timeshare owner bills rather than a single bill. He said they have timeshares where the bill goes to the Association and not individual owners. Our developer requested separate bills. He also said that the roughly $20 special timeshare charge on each owner's annual tax bill is the County's fee to recover their additional costs for separate bills.

Why would Marriott do something as bloody stupid as request separate bills?

I am not a Marriott owner but I do own several timeshares in California. I wish they all had separate property tax bills.....why?....because when the developer pays the property tax they pay the bill based on the inflated developer price. I buy resale only and for pennies on the dollar. I have been successful in the past getting the county assessor to reduce my tax liability and to base it closer to my resale price and not on the developers inflated pricing.

I wish I could do that with two of my timeshares where the developer pays the bill. I am trying to find a way to separate them but I have not been able to do it as of now.

I understand that, but suspect that the HOA is in a better position to apply on behalf of all owners rather than let/make each to do this on his/her own.

I'm not sure the response you got from the assessor is entirely accurate. Even if accurate, it doesn’t paint a true picture.

For the typical resort in most other states, the entire resort is assessed, a single bill is sent to the resort and Marriott (or other management company) simply treats that bill as one of the many expenditures apportioned pro rata to all owners. Very simple to administer.

In California, by law, each parcel (each timeshare week) is assessed separately and the owner has the opportunity to appeal an assessment. Those assessments are supposed to be based on value as of the date of purchase by the owner. Future increases are limited by law. Thus, there are probably almost as many different assessment amounts for a resort as there are separate ownerships at the resort!

It would be time-consuming for Marriott to allocate each of those bills to the proper owner and add it into MFs for the proper owner. You can bet that Marriott would charge for doing that - probably more than $20 per owner. And that would end your right to appeal an inappropriate assessment.

Further, Marriott would then be taking responsibility for ensuring it gets a bill for your week. Imagine the fight between you and Marriott if you don't get billed because Marriott never received the bill or because there was a change in ownership and the county addressed the bill to the old owner, etc. And if Marriott were responsible for appealing each of thousands of assessments, imagine how much that would cost in added fees! The possible permutations for things to go wrong are almost endless.

It's probably best that you take responsibility for the taxes!

With Prop 13 in California, every timeshare is valued for tax purposes based on the last selling price, plus an annual percentage increase. If the developer got a single bill for all timeshares, each timeshare would be valued differently based on the selling price, and Marriott would have to spend time and money determining what amount to bill each owner, or (more likely with Marriott) just bill everyone an equal sum based on the total bill divided by the number of owners (and an extra percentage for Marriott's "administrative costs"). Thus, Marriott probably decided that the owners would be happier in each paying directly, rather than many paying more than their fair share.

Hence, separate property tax bills for owners.

They told me the annual increase is 2%.

I have no idea what the CA code says and the amount of the bill is just not worth the investment of time to investigate. It took me from 2005 to now to take the time to call about this error. I did appeal last year, but declined their invitation to a hearing. This year's hour on the phone may have resolved the problem, but it was not the best use of my time.

All I know is the assessor who I spoke with said that some timeshares have requested separate assessments and bills; while others have not. He felt those who wanted separate bills did not want responsibility for the tax bills.

One of the benefits of having an HOAs is to let them deal with issues such as these on our collective behalf. I really could care less if I pay a few bucks more as long as the overall assessment of the resort is reasonable and that has been properly prorated by unit size and type of contract (EY/EOY). Seems to work just fine at every other timeshare I own/owned.

I also question the efficiency issues for the county government. This has to be a nightmare for them.

JimC said:

I really could care less if I pay a few bucks more as long as the overall assessment of the resort is reasonable and that has been properly prorated by unit size and type of contract (EY/EOY). Seems to work just fine at every other timeshare I own/owned.

Click to expand...

See my above discussion about the unique way California law requires assessments to be made for each individual timeshare week - based on the timeshare value at the date the owner purchases. That's what causes the "nightmare" in California versus the more simple way that assessments can be handled in other states.

I'm very happy with my tax bill for SCI in Orange County, CA. This year was $18.34. It even provided me the opportunity to split it in two payments.

I would have done the two payments just for the fun of it, but figured I'd likely mess it up and end up paying a late fee.

I would bet you that the developer, and especially Marriott, would not act in your best interest to try to get the lowest tax valuation for your week. In fact, they would probably want it as high as possible since they are trying to sell that week for an exorbitant price and how would it look if you paid $30K for a week and its tax valuation was only $10K?

Marriott would always agree to an Association billing rather than individual bills to the unit week owner. By management contract, Marriott receives a 10% management fee on property tax bills that are paid by the Association. There are a few early Marriott developed properties in Florida where the management fee does not apply to property taxes. The majority of Associations have an owner funded tax reserve fund. As an example, if the tax bill is paid by Marriott using the Association tax reserve funds of $1million, Marriott receives a management fee of $100,000 for writing the check.

This is an every year event. It the property taxes increase by $100,000 to $1.1million, Marriott would receive an additional $10,000 in the management fee, in addition to the 10% fee on the base amount of $1miilion for a total fee of $110,000. Certain Association COA Boards are attempting to get a revision of this management fee amount--so far unsuccessfully.

Dave M and HOC have explained how property taxes under Prop 13 are assessed in California. The base rate is set on the recorded price paid for the property. In this case the T/S week price from Marriott or where ever it was purchased. In my case the bill shows land plus structures to arrive at the property full value.. The tax rate is 1% of this full value, plus any local "special assesments". For Shadowridge in Riveerside County, where I own, these include Unified School District and Community College debt service and Coachella Valley Water Debt service. These 3 items are about 11.5% of the base rate. Then they add the timehare assessment fee of $20.32. I never knew what this was for but thanks to Jim I now know its for the individual bills. Finally the assessed evaluation can only be increased by 2% per year under prop13. So what ever your taxes are set originally they go up about 2% per year plus any new special assessments voters approve.
Interesting to note the full value is usually set lower than the price paid.

pumbug said:

Dave M and HOC have explained how property taxes under Prop 13 are assessed in California. The base rate is set on the recorded price paid for the property. In this case the T/S week price from Marriott or where ever it was purchased. In my case the bill shows land plus structures to arrive at the property full value.. The tax rate is 1% of this full value, plus any local "special assesments". For Shadowridge in Riveerside County, where I own, these include Unified School District and Community College debt service and Coachella Valley Water Debt service. These 3 items are about 11.5% of the base rate. Then they add the timehare assessment fee of $20.32. I never knew what this was for but thanks to Jim I now know its for the individual bills. Finally the assessed evaluation can only be increased by 2% per year under prop13. So what ever your taxes are set originally they go up about 2% per year plus any new special assessments voters approve.
Interesting to note the full value is usually set lower than the price paid.

Click to expand...

The reason that the assessed value is less than the purchase price is that in California assessed value is the amount subject to taxation. Many years ago the State Assembly ruled that the amount paid for timeshare included non-taxable items such as furnishings and services. The standard applied for all California timeshares non-taxable portion was 35%. Hence, timeshare assessed valuations are computed as: Purchase Price x .65 x 1% (and any special assessments, usually between 0.1 and 0.25%).
As already mentioned , Proposition 13 limits the annual increase in assessed valuation to a maximum of 2%.

Hoc said:

With Prop 13 in California, every timeshare is valued for tax purposes based on the last selling price, plus an annual percentage increase. If the developer got a single bill for all timeshares, each timeshare would be valued differently based on the selling price, and Marriott would have to spend time and money determining what amount to bill each owner, or (more likely with Marriott) just bill everyone an equal sum based on the total bill divided by the number of owners (and an extra percentage for Marriott's "administrative costs"). Thus, Marriott probably decided that the owners would be happier in each paying directly, rather than many paying more than their fair share.

Hence, separate property tax bills for owners.

Click to expand...

HOC, right you are.
While some may think that the "inefficiency" caused by individual tax bills is a big waste of time,money,and government resources, etc., it may serve to put the issue in its appropriate context.

California Proposition 13, the "taxpayer revolt" of 1978, is what caused base property valuations to change only at sale, 30 years ago come June.
It is not the law's fault that timeshares are real property. Prop 13 was not enacted for timeshares. It was enacted for all real property by what almost all at the time considered not doable; a super-majority (67%) of the electorate.

Up until then taxable "assessed valuation" of a home was adjusted every year based on the tax assessor's estimate of its market value.
The problem was that California was the land of milk and honey. Property values were increasing so much that owners no longer could afford to keep their homes. Retired families on fixed incomes, whose mortgage had been paid in full, were losing their homes to a tax sale by the thousands.
Their children, who attended the finest university system in the country built with those same taxes, did not pay one dollar for tuition. It was free.
California's government had become so intoxicated with all that money nothing was efficiently managed. Until no one could afford it.

Despite dire warnings of Armageddon from bureaucrats of every stripe Proposition 13 rolled back property taxes 57% overnight, and permitted an adjustment of the base assessed valuation only at sale, except for a maximum 2% increase for cost considerations annually. Downward adjustments were also permitted. At last, if a homeowner could afford what they bought, they could afford to keep it.

Prop 13 was senior citizen driven grass roots politics. They were the biggest victims. They drove voters to polling places, hosted evening coffee meetings in their neighborhoods, and generally did what it took to deliver 2 of every 3 votes in California, over the scare tactics of every vested agency in the state.

THAT is why you have individual tax bills with California timeshares.

BTW, for the posters who think that it must be costly, inefficient, and unnecessary work for the assessor's office to issue individual bills,
consider that the condo that generates up to 52 tax bills does so for an assessed valuation 5 times its real property value.
THAT is why the government likes to do all that extra work.

Dave M said:

In California, by law, each parcel (each timeshare week) is assessed separately and the owner has the opportunity to appeal an assessment. Those assessments are supposed to be based on value as of the date of purchase by the owner.

Click to expand...

After reading this thread I became irritated and decided to send in my appeal for the second time. I never got any response from the first over a year ago. When I received my first property tax bill the assessed value was 100% greater than the amount I paid. I filed for an appeal and never got any response. I also called the Co of Riverside and never got any return call. Hopefully my second appeal will get their attention. Anyone else try this in California and had positive results?

The problem is the HOA is controlled by the developer who is still in sales. No way do they want to admit that what they just sold at full price is worth much less in the resale market. Plus I am pretty sure that they make more money via their management contract by handling the property taxes themselves.

JimC said:

I understand that, but suspect that the HOA is in a better position to apply on behalf of all owners rather than let/make each to do this on his/her own.

Click to expand...

cp73 said:

After reading this thread I became irritated and decided to send in my appeal for the second time. I never got any response from the first over a year ago. When I received my first property tax bill the assessed value was 100% greater than the amount I paid. I filed for an appeal and never got any response. I also called the Co of Riverside and never got any return call. Hopefully my second appeal will get their attention. Anyone else try this in California and had positive results?

Click to expand...

Based on the calculations cited in this thread, I probably overpaid about 35 dollars this year. This is my first year and they are probably using the old owner's cost as a tax rate. If they dont change it next year I will appeal it. Good luck!

JohnnyO said:

The problem is the HOA is controlled by the developer who is still in sales. No way do they want to admit that what they just sold at full price is worth much less in the resale market. Plus I am pretty sure that they make more money via their management contract by handling the property taxes themselves.

Click to expand...

The developer pays taxes on the unsold units. I would think that is incentive enough to keep the taxable value as low as possible.

CA Property TAX Riverside County

cp73 said:

I filed for an appeal and never got any response. I also called the Co of Riverside and never got any return call. Hopefully my second appeal will get their attention. Anyone else try this in California and had positive results?

Click to expand...

I called the Co of Riverside tax assessors office today. I finally spoke with someone, although not quite the person responsible for my valuation. I was told that the property tax on CA timeshares is generally based upon the full cash value, as determined by the county assessor. To arrive at the assessor valuation generally the first thing they look at is the price paid. However, they also look at comprable recent sales. In other words they may also be looking at recent Marriott resales, and other market sales. They then compare your purchase price to the average market value of comprable sales. As long as your price is within that range they will use it. In my case when I purchased mine I knew at the time it was way way below market value. And at DSV I there is no ROFR.

After I hung up I went and researched Prop 13. I must agree it doesn't say 1% of the purchase price. It says its based upon full cash value which is determined by the assessors valuation. It doesn't say anything about being 1% of the purchase price, except generally that is what is used as long as its within the assessors valuation range.

Oh well, I guess I should be happy I got a good deal on the TS. The offical person who did my valuation is suppose to contact me next week. Oh, and they did have my first appeal on file from Sept 06. They said it can take up to 2 years before a hearing gets set.

cp73 said:

I called the Co of Riverside tax assessors office today. I finally spoke with someone, although not quite the person responsible for my valuation. I was told that the property tax on CA timeshares is generally based upon the full cash value, as determined by the county assessor. To arrive at the assessor valuation generally the first thing they look at is the price paid. However, they also look at comprable recent sales. In other words they may also be looking at recent Marriott resales, and other market sales. They then compare your purchase price to the average market value of comprable sales. As long as your price is within that range they will use it. In my case when I purchased mine I knew at the time it was way way below market value. And at DSV I there is no ROFR.

After I hung up I went and researched Prop 13. I must agree it doesn't say 1% of the purchase price. It says its based upon full cash value which is determined by the assessors valuation. It doesn't say anything about being 1% of the purchase price, except generally that is what is used as long as its within the assessors valuation range.

Oh well, I guess I should be happy I got a good deal on the TS. The offical person who did my valuation is suppose to contact me next week. Oh, and they did have my first appeal on file from Sept 06. They said it can take up to 2 years before a hearing gets set.

Click to expand...

Prop 13 indeed sets the maximum tax rate at 1% of assessed valuation (not purchase price). Assessed value is generally less than the purchase price at the time of purchase. It can increase by up to 2% annually, based on increases in the Consumer Price Index.
In the case of timeshares, assessed value is 65% of the purchase price.

From California Tax Data:
"Since the passage of Proposition 13, a couple of things have happened. The property tax rate was set at a 1% cap. This means that the amount in property taxes you have to pay can only be up to 1% of the assessed value of your home. The assessed value of homes cannot exceed the 1975-76 assessed value and can increase based on the Consumer Price Index (CPI) by no more than 2% per year. If a transfer of ownership takes place or improvements are made, the property will be subject to a reassessment at the current market value. The newly assessed value will then increase on a yearly basis not to exceed 2% per year. The decrease in property taxes as a gross percentage of the assessed value of homes has forced local agencies (cities, counties, and other special districts) to find other sources of funding. These local agencies were given more authority to levy local non-ad valorem property taxes as a result of the passage of Proposition 13; however, the “special taxes” must be approved by two-thirds of the voters. Proposition 13 was intended to protect taxpayers from unanticipated increases in property taxes, to provide effective tax relief, and to require voter approval of tax increases."

Fredm said:

Prop 13 indeed sets the maximum tax rate at 1% of assessed valuation (not purchase price). Assessed value is generally less than the purchase price at the time of purchase. It can increase by up to 2% annually, based on increases in the Consumer Price Index.
In the case of timeshares, assessed value is 65% of the purchase price.

From California Tax Data:
"Since the passage of Proposition 13, a couple of things have happened. The property tax rate was set at a 1% cap. This means that the amount in property taxes you have to pay can only be up to 1% of the assessed value of your home. The assessed value of homes cannot exceed the 1975-76 assessed value and can increase based on the Consumer Price Index (CPI) by no more than 2% per year. If a transfer of ownership takes place or improvements are made, the property will be subject to a reassessment at the current market value. The newly assessed value will then increase on a yearly basis not to exceed 2% per year. The decrease in property taxes as a gross percentage of the assessed value of homes has forced local agencies (cities, counties, and other special districts) to find other sources of funding. These local agencies were given more authority to levy local non-ad valorem property taxes as a result of the passage of Proposition 13; however, the “special taxes” must be approved by two-thirds of the voters. Proposition 13 was intended to protect taxpayers from unanticipated increases in property taxes, to provide effective tax relief, and to require voter approval of tax increases."

Click to expand...

While your information is thorough and accurate it is important to note that each County within the State of California is allowed to establish individual guidelines for their assessment of timeshares. Not all Counties use the 65% valuation method. They do all, however, abide by the "market value" regulation in the R & T (Revenue and Taxation) code as set by the State Board of Equalization.

The 65% formula was derived from the need to acknowledge the developer costs (and markup) in marketing their new units. However, there are markets and developers with new projects that don't suffer an immediate 35% depreciation upon resale. As loyal Tuggers we also know there are markets and projects where the loss is significantly greater than 35% upon resale.

cp73 said:

Anyone else try this in California and had positive results?

Click to expand...

I did in a condo in Fremont, CA. After I purchased, the developer dropped the price a bit and I appealed using the correct process and provided a list of comparable sales for the same units, and there was no hearing, they just dropped their valuation to match the comparable sales. It's important that you use the correct process. There's a limit to when the appeal can be filed and you have to file it with supporting documentation. The best supporting documentation is a list of comparable sales with tax map keys.

Once they drop your valuation, the 2% cap on increased valuation is removed until the valuation gets back to where it would have been had they not lowered your valuation. Another less-known fact about Prop 13.

-David

voyager1 said:

While your information is thorough and accurate it is important to note that each County within the State of California is allowed to establish individual guidelines for their assessment of timeshares. Not all Counties use the 65% valuation method. They do all, however, abide by the "market value" regulation in the R & T (Revenue and Taxation) code as set by the State Board of Equalization.

The 65% formula was derived from the need to acknowledge the developer costs (and markup) in marketing their new units. However, there are markets and developers with new projects that don't suffer an immediate 35% depreciation upon resale. As loyal Tuggers we also know there are markets and projects where the loss is significantly greater than 35% upon resale.

Click to expand...

Yes, each County is free to establish its own guideline for assessment at resale.
It surely helps with valuation consistency within a jurisdiction.

Riverside County (the Shadow Ridge reference) is 35%.

Orange County (Newport Coast Villas) is 40%.

Depreciation notwithstanding, the price paid is "market value" at resale.

However, the assessed value of the original purchase from the developer is another matter. It's market value is the purchase price x .65. The 35% here is not meant to reflect depreciation or a suggested County guideline, but the standardized non-taxable value included in the original price when sold by the developer(furnishings, services, etc.).Sec. 998 below defines the non-taxable exclusion. The 35% standard is what I am having difficulty putting my finger on, but it is in my paper files somewhere. (it also computes when compared to the initial assessed valuations).

R & T Code specifies:
998. (a) The full value of a time-share estate or a time-share use
subject to tax under this division shall be determined by finding the
real property value of the interest involved and shall not include
the value of any nonreal property items, including, but not limited
to, vacation exchange rights, vacation conveniences and services, and
club memberships......

The amazing thing is under the management contract formula at one timeshare I own that is still in sales the developer does not pay the maintenance fees for the unsold units. I wonder if they pay the property taxes on the unsold units...hmmm

JimC said:

The developer pays taxes on the unsold units. I would think that is incentive enough to keep the taxable value as low as possible.

Click to expand...

cp73 said:

It says its based upon full cash value which is determined by the assessors valuation. It doesn't say anything about being 1% of the purchase price, except generally that is what is used as long as its within the assessors valuation range.

Click to expand...

Well today I finally spoke with the assessor in Riverside County who is responsible for the valuations. Nice conversation. Prior to calling me he had reserached my situation and knew exactly what I had paid and when. I appreciated that fact that he did this prior to calling me back. It boils down to that timeshares are valued differently than most residences. That is because they are all identical. Other than the seasons at DSV they are all the same. With a personal residence each one can have something different to effect its valuation. It could be the location on the street, landscaping, color of carpeting or an unlimited number of other things. Therefore for timeshares they look at recent sales prices of the locations units and throw out the high and low extremes. They pretty much use an average valuation of recent pricing. So based on this I would guess anyone who purchased at DSV I in 2005 probably has a similar valuation as mine. Although this isn't the answer I wanted to hear its probably a fair one. Oh well I am just glad I got such a good deal on the price of the unit.

This is a very interesting thread, because I received my tax bill for Timberlodge recently. It showed the assessed value at $12500, but my taxes were $150. So much for 1%. I guess El Dorado County is different than the rest of the state.