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By Steve Ornellas | Broker in Fremont, CA

Estimating Property Taxes in CA

In California, "1.25% of assessed value" and/or "$1.25 per $1,000" are general and commonly used property tax estimates. The truth is, if you want the most accurate property tax estimate you will need to do some fairly easy research.


Chapter 1 - Tax Levies

Your effective property tax bill actually consists of three separate levy categories:


1) General Tax Levy

Controlled by Proposition 13, this tax is limited to a maximum of 1% of the assessed value of your property (the "land" and "improvements"). As it presently stands, this can be no more than 2% greater than the previous year's tax.

Typically, sometime in July of each year property owners will receive a "Notification of Assessed Value" (calculated as of Jan 1st) from the County Assessor for the upcoming fiscal tax year. The assessed value shown on the notification (minus any exemptions, if applicable) is the value basis for your "ad valorem" (Latin for "according to value") taxes.

Note that each year the Assessor compares the factored Prop 13 base year value to the current year January 1 market value after applying the California State Board of Equalization CA Consumer Price Index increase and uses the LESSER of the two figures.

The CA State Board of Equalization sends the "Final Assessment" to County Assessors each December. As an example, here's the
December 2010 Final Assessments for the Jan 1, 2011 prop tax Assessment.

2) Voter Approved Indebtedness

Includes taxes levied to repay bonds approved by the voters (with the current State budget crisis many cities are starting to place parcel taxes on voter ballots, by the way). This amount varies from county to county depending upon the number of local bond issues approved. Under current law, local general obligation bonds require a 2/3rds majority vote to pass (again, due to the State budget crisis this 2/3rds requirement is being targeted for reduction to a simple majority vote of 51%).

3) Direct/Special Assessments

Now controlled by Proposition 218, these assessments require a majority vote of the property owners, with each owner voting the dollar amount of their assessment. Fees charged for the property-related services of sewer, water, and refuse collection can be imposed without a vote, but may not be greater than the cost of providing the service.

There are over 20 different types of these taxes (i.e., Mello-Roos, Assessment Districts, Vehicle Parking districts, etc.), so you really do need to check this.


Case in point: San Ramon, CA has areas where the effective tax rate is 1.73% versus 1.21% due to
Direct/Special Assessments that's a $520 per $100,000 difference!
Can it get worse? You bet it can! See this Trulia post from a Beaumont, CA resident.



Chapter 2 -
Your Effective Property Tax Calculation


So, in order to arrive at the most accurate figure follow these steps for any purchase:
1.) Take your assumed purchase price and multiplying by 1% to get your General Tax Levy.

2.) Next, go to your County Tax Assessor's website and search for the Secured Property Tax link so you can enter the property address and get all of the Voter Approved Indebtedness and Direct/Special Assessments tax details.

3.) Add all of these taxes/costs up and then divide by the purchase price, which is your effective total tax rate.

Taking these steps will provide you with the most accurate figure. Below are some of the CA County Assessor's websites I have had to use. If you do not see your specific County a simple "(insert your County here) County Tax Assessor" Google search should uncover the website you need.

El Dorado San Mateo Santa Clara Santa Cruz
Sacramento 
(accept the Data Disclaimer, look up address, and click on the "Link to ePropTax" to get to details.)

San Francisco: https://gate.link2gov.com/sfpropertytax/PropertySearch.aspx?TaxType=Secured

Alameda: https://www.acgov.org/ptax_pub_app/RealSearchInit.doshowSearchParmsFromLookup=true
Contra Costa: https://taxcolp.co.contra-costa.ca.us/taxpaymentrev3/summary/account_lookup.jsp

Humboldt: https://common2.mptsweb.com/megabytecommonsite/(vw3el445lstbebmgpgawzoze)/PublicInquiry/Inquiry.aspxCN=humboldt&SITE=Public&DEPT=Tax&PG=Search

Looking for even more Property Tax info? Review the following Property Tax Overview



Chapter 3 - Understanding Supplemental Tax after a Purchase

When you purchase an existing home you actually temporarily inherit the prior owner's tax amount. This happens because it takes the County some time to recognize the change in ownership, which then triggers a Supplemental Tax bill.

 

In normal markets, where the new purchase price is greater than the Seller's basis, the supplemental tax bill informs you that you will be paying more due to the increase in purchase value. However, in a declining market where purchase prices can be less than what the prior owner purchased at, you will also get a Supplemental bill advising that you have to pay taxes at the higher rate of the prior owner. This is because the County levies taxes based on property values as of January 1st of the year, which possibly in your case will show a higher value for the home than what you actually bought the house for. If this is the case, your true new tax base won't be corrected until Jan 1st of the following year. You should receive a credit/refund for any over-payment that you do make after this corrects itself (but it never hurts to go down to the County Tax office and/ or make calls to make sure you will).


One of the things that make this so confusing is the overlap of assessments and the fiscal tax year. The actual tax lien amount on a property is figured on the 1st of the year, but the actual fiscal tax year starts on July 1st.  You can see this
here.



Chapter 4 - Reducing your Property Tax

As a homeowner you will want to become familiar with CA's Prop 8, which allows you to petition for lowering your property taxes based on reduced market value. After any Prop 8 reassessment, your property assessment can change upwards at an accelerated rate well above CA's Prop 13 constitutional 2% cap normally expected, and will only occur at this accelerated rate until your property has reached the same level before the Prop 8 reassessment. An appraisal by the homeowner is NOT required however you are required to show similar property sales. The BEST way to collect this information is to engage a local Realtor® to request this information (a good reason to reconnect with the Realtor who sold you the house - if you enjoyed working with that person). The CA Board of Equalization has a number of very useful videos that explains the whole process.

-Steve

Here are some important tax dates for property owners:
January 1: The assessment of property applies as of 12:01 a.m. on this day each year.
February 15: Legal deadline for filing exemption claims for welfare, cemetery, college and exhibitions. February 15: Legal deadline for filing an exemption claim for homeowners, veterans and disabled veterans. April 1: Due date for filing Business Personal Property statements.
April 10: Last day to pay second installment of property taxes without penalty.
May 7: Legal deadline for filing business personal property statements without penalty.
July 1: Assessment roll delivered by Assessor to County Auditor-Controller.
July 2 - September 15: Period during which requests for hearings before the Assessment Appeals Board on regular fiscal year assessments must be filed in writing.
Mid-July: Annual mailing of assessment notices to all County real property owners stating the taxable value of the property.
August 31: Regular roll unsecured taxes due.
December 10: Legal deadline for filing a late exemption claim for homeowners, veterans and disabled veterans.
December 10: Last day to pay first installment of property taxes without penalty.

Comments

By Santarosaguy,  Wed May 26 2010, 15:52
Thanks! This is a very informative article.
By Steve Ornellas,  Wed May 26 2010, 16:21
Santarosaguy, you a very welcome, I'm glad you found it informative. Best, Steve
By Mike,  Tue Jun 29 2010, 12:26
Steve, You article is VERY HELPFUL. I would rate A+++!

Mike
By Steve Ornellas,  Tue Jun 29 2010, 12:33
Hi Mike, very pleased that you found it helpful!
Best, Steve
By David Chiles,  Wed Oct 19 2011, 18:27
Thanks for sharing the tax code. I recommend seeing a professional. It's worth it if you get audited.
By Steve Ornellas,  Wed Oct 19 2011, 19:00
Hi David, I’m guessing your "tax code” comment has to do with the fact that many tax bills have “tax assessments” that are not tax-deductible. My understanding is only “ad valorem” (based on value) taxes are tax deductible for an individual property owner and non-ad valorem (i.e. Mosquito abatement, voter approved measures, paramedic services, etc.) are not. On the other hand, I believe all “tax assessments” are deductible when the property is an investment.

I agree individuals should work with professionals. When it comes to tax preparation I recommend AT LEAST a preparer with an Enrolled Agent designation [http://www.irs.gov/taxpros/agents/article/0,,id=100710,00.html ] and prefer CPAs.
By Jane Peters,  Fri Sep 7 2012, 18:43
I am going to school on this one. Thank you.
By Steve Ornellas,  Fri Sep 7 2012, 19:01
Hi Jane, thanks for the comment.
The experience of pulling this together was a little like touring a sausage factory and never wanting to eat another one ;-)
By Shane Milne,  Thu Dec 13 2012, 12:03
Thumbs up for this blog post. For others reading, if you like it, give Steve a thumbs up.
By Steve Ornellas,  Thu Dec 13 2012, 12:47
Thanks for the "TU" Shane!

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