San Francisco's Property Tax Overcharge Crisis: 555% More Homeowners Now Appeal
San Francisco faces 9,281 property tax appeals—and could owe over $1 billion if it misses processing deadlines. But what's causing the surge?—and could owe over $1 billion if it misses processing deadlines. But what's causing the surge?
Key Takeaways:
The numbers tell a brutal story.
Property tax appeals in San Francisco have exploded to 9,281 cases, dwarfing even the 2009 recession's peak of 6,620. The city now expects to refund $105-189 million annually for six straight years—roughly $817 million total.
Miss the state's two-year processing deadline? Property owners automatically win. Total liability could exceed $1 billion.
The Perfect Storm Behind the Appeals
Post-pandemic San Francisco created a unique assessment nightmare:
- 40% office vacancy rates (vs. 5% pre-pandemic)
- 33% drop in commercial property values
- One-third of workers permanently remote
The problem: Assessments use comparable sales data that lags 6-18 months behind market reality. When markets crater fast, tax bills stay high while property values plummet.
Result: Thousands of owners discovering their assessments were 20-40% above actual market value.
What does this tell us?
It indicates that a significant portion of SF's property tax base was assessed above actual market values during the 2020-2024 period—and is now being corrected through the appeals process.
Why this happens:
- Assessment methodology limitations: Mass appraisal systems use comparable sales, which inherently lag market conditions
- Rapid market shifts: Pandemic-era changes happened faster than annual assessment cycles could capture
- Sector-specific impacts: Commercial real estate declined while some residential held steady, creating complexity
- Appeals-based correction system: Rather than proactive market adjustments, corrections happen via individual appeals
Important context: The city expects to refund $817M even while successfully defending many appeals. If they miss the 2-year processing deadline, automatic acceptance of taxpayer valuations could push total refunds over $1 billion.
This suggests the true scope of assessment-to-market-value gaps is even larger than $817M.
The Timeline Asymmetry: An Inherent System Imbalance
One of the most striking elements in the SF Standard article is the processing timeline disparity:
When you owe the government:
- 30-day payment deadline
- Immediate penalties for late payment
- Risk of liens and foreclosure
When the government owes you:
- Months-long refund processing
- No penalty interest on delayed refunds
- Multiple agencies coordinate, extending timelines
The article mentions one taxpayer waiting on a $179,000 refund with no specific timeline.
Why this matters:
This asymmetry creates a cash flow burden on property owners who must continue paying inflated tax bills while appeals are processed, then wait additional months for refunds even after winning.
Peter Fatooh, former appeals board member, raises the key question in the article: "How is it that a taxpayer has 30 days to pay if the city says they owe them, but the city strings them out on a property tax refund?"
The government's explanation: Property tax payment deadlines are state-mandated, while refunds require coordination between assessor-recorder, appeals board, controller, and tax collector offices. Software upgrades in summer 2024 also delayed processing.
The taxpayer perspective: Regardless of the reasons, the financial burden of the gap falls entirely on property owners.
The "Underpayment" Problem: When Government Delays Create Private Liability
The article also highlights homeowners facing a different challenge: they're currently underpaying taxes because the assessor's office hasn't processed their property purchases or renovations.
Approximately 14,000 "assessable events" are backlogged.
The situation:
One family purchased a property in May 2024. They expect a roughly $45,000 supplemental tax bill whenever the city processes their purchase—potentially years later, with retroactive charges.
The challenge:
These homeowners are stuck in financial limbo:
- Don't know when the bill will arrive
- Don't know the exact amount
- Can't budget for major expenses (renovations, investments)
- May face lump-sum payment obligations for multiple years
The government's position: The backlog resulted from pandemic impacts and resource constraints. They're working to hire six additional staff to accelerate processing.
The homeowner impact: Regardless of cause, families face surprise five-figure tax bills and financial planning uncertainty due to administrative delays outside their control.
Fairness question: Should property owners bear the financial consequences (retroactive bills, interest, uncertainty) of government processing delays?
Why Homeowners Must Appeal Repeatedly: A System Design Issue
The article profiles Danielle Wang, who has successfully appealed her condo's property taxes for three consecutive years. She won her 2023 appeal and received a refund. Then had to appeal again for 2024. And will likely need to appeal again for 2025.
Why doesn't one successful appeal fix the problem going forward?
How assessment adjustments currently work:
- Each tax year is assessed independently
- Winning an appeal for 2023 doesn't automatically adjust 2024 or 2025
- Property owners must file separate appeals annually if assessments remain inflated
The alternative approach (not currently used):
When market evidence clearly shows sustained value changes (like multi-year commercial property declines), proactively adjust assessments rather than requiring annual appeals.
Why this doesn't happen:
- Administrative burden: Proactive reassessments across thousands of properties require significant staff resources
- Revenue implications: Automatic reductions decrease tax collections; appeals put burden on property owners
- Methodology: Mass appraisal systems aren't designed for frequent market-driven downward adjustments
- Legal framework: Current structure places burden of proof on property owners
The result: Property owners like Wang must appeal year after year, even after proving their property is overassessed.
Five Lessons from San Francisco's Experience
Lesson 1: Market Changes Don't Automatically Trigger Assessment Adjustments
SF's 555% appeal surge occurred because property owners had to individually appeal rather than receiving proactive adjustments.
Takeaway: Monitor your assessment relative to current market conditions. Don't wait for the assessor to notice discrepancies.
Lesson 2: Systems Struggle with Rapid Market Shifts
The pandemic created market changes faster than annual assessment cycles could capture.
Takeaway: In volatile markets, your assessment is more likely to be misaligned with actual value.
Lesson 3: Successful Appeals Often Require Annual Repetition
One win doesn't guarantee future accuracy.
Takeaway: Build annual assessment review into your property ownership routine.
Lesson 4: Processing Delays Create Real Financial Burdens
Whether waiting for appeal refunds or surprise supplemental bills, delays have material cash flow impacts.
Takeaway: Factor potential assessment issues into financial planning and maintain reserves for tax adjustments.
Lesson 5: Scale Matters for Government Response
When 9,281 appeals hit simultaneously, the system struggles. Individual appeals in less impacted areas may process faster.
Takeaway: Don't let potential backlog discourage you from appealing if overassessed.
How the System Could Work Better
Several reforms could reduce the appeal volume SF is experiencing:
1. Proactive Market Adjustments
Current: Wait for individual appeals
Alternative: When comparable sales clearly show market declines, proactively adjust assessments
Benefit: Reduces appeal volume, provides more accurate billing, decreases refund obligations
Challenge: Requires resources, reduces immediate revenue, needs clear methodology for triggering adjustments
2. Multi-Year Assessment Locks After Successful Appeals
Current: Win appeal for 2023, must re-appeal for 2024, 2025, etc.
Alternative: Successful appeals carry forward for 2-3 years unless market materially changes
Benefit: Reduces redundant appeals, acknowledges sustained value changes
Challenge: Requires system redesign, may miss market recoveries
3. Expedited Refund Processing
Current: Months-long multi-agency coordination
Alternative: Streamlined process with service-level commitments and penalty interest for delays
Benefit: Reduces cash flow burden on taxpayers
Challenge: Requires process redesign, costs government penalty interest
4. Transparent Processing Timelines
Current: Uncertain wait times for both appeals and supplemental bills
Alternative: Clear communication of expected timelines and queue position
Benefit: Allows better financial planning
Challenge: Requires tracking systems and regular communication
5. Payment Plans for Retroactive Bills
Current: Lump sum bills for multiple years of back taxes
Alternative: Mandatory interest-free payment plans for delays exceeding 12 months
Benefit: Reduces financial shock for property owners
Challenge: Delays revenue collection for government
Likelihood of implementation: These reforms would require political will, budget allocation, and system redesign—significant barriers even when the logic is sound.
The Bigger Picture: Assessment Accuracy Matters
San Francisco's situation—9,281 appeals, $817 million in projected refunds, thousands of properties in limbo—highlights why assessment accuracy matters:
For individual property owners: Overpayment of thousands per year, cash flow disruptions, time spent on appeals
For local government: Budget uncertainty, refund obligations, administrative burden, public trust
For the system overall: Questions about fairness, efficiency, and whether current mass appraisal methods can keep pace with modern market dynamics
The core tension: Balancing the need for stable, predictable revenue (government perspective) with the need for accurate, fair assessments (property owner perspective).
San Francisco's experience suggests that when market changes are significant and rapid, this balance breaks down—and the appeals process becomes the pressure relief valve.
What to Do Next
If you're a property owner (in San Francisco or elsewhere):
- Check your current assessment against recent comparable sales
- Calculate your appeal deadline (typically on your assessment notice)
- Determine if you have a strong case (10%+ overassessment, good comparable evidence)
- Decide on DIY vs. professional help based on complexity and stakes
- File before the deadline (or engage TaxDrop to handle it)
Don't assume:
- Your assessment is accurate just because you haven't checked
- The assessor will proactively correct overassessments
- One successful appeal will fix future years
- The government will process refunds quickly
Do assume:
- Assessments can be wrong, especially in changing markets
- The burden is on you to identify and appeal overassessments
- Professional help can improve outcomes for complex cases
- The process requires patience and persistence
Ryder Meehan
Ryder Meehan is the Co-Founder of TaxDrop and a Licensed Property Tax Protest Consultant
FAQs
Why did San Francisco see such a dramatic increase in appeals?
The 555% surge reflects post-pandemic market changes—especially commercial property value drops and remote-work impacts—combined with assessments that didn’t keep pace with real market conditions. When owners compared their bills to actual market values, many found big discrepancies worth challenging.
Does a high volume of appeals mean assessors are doing a bad job?
Not really. It mostly shows that assessment systems relying on comparable sales struggle during rapid market shifts, like those triggered during the pandemic.
How long should property tax refunds take?
It varies by county. In San Francisco, the timeline can stretch from several months to over a year due to coordination across multiple agencies (assessor, appeals board, controller, tax collector).
Why don’t assessors automatically reduce values when markets decline?
Assessments place the burden on owners to prove overvaluation through appeals. Proactive reductions require major resources, clear rules, and acceptance of immediate revenue hits—most jurisdictions aren’t set up for that.
Should I continue paying my property tax bill while appealing?
Yes. You must pay the full amount on time to avoid penalties and liens; if you win the appeal, you’ll receive a refund later.
What happens if the assessor misses the 2-year appeal deadline?
In California, the owner’s claimed value is automatically accepted if an appeal isn’t resolved within two years. That’s why San Francisco is rushing—missing deadlines on appeals claiming extreme reductions could trigger massive refund liabilities.
How do I know if my property is overassessed?
Compare your assessed value to recent (6–12 month) sales of similar homes—size, age, condition, and location. If your number is 10–15% above comparable market values, you may have a strong case.
Do most property tax appeals succeed?
Nationally, about 40–60% of appeals get a reduction. Strong comparables, good documentation, and accurate property data significantly boost your odds.
Can I appeal if my property value has increased but I still think the assessment is too high?
Yes. Even in rising markets, your specific property may be mis-assessed due to errors, unique issues, or bad comps.
How does TaxDrop’s contingency model work?
You pay nothing upfront. We handle the entire process and only get paid if we win—typically 25–35% of the first year’s savings. If there’s no reduction, you owe nothing.
