Rental Basics in Sacramento>Question Details

Nancyginger, Home Buyer in Sacramento, CA

what is the tax rate on rental property that is owned free and clear?

Asked by Nancyginger, Sacramento, CA Sat Jul 10, 2010

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Some say 1% some say 1.25% :: Why the difference? Well, the base is 1%. Landscape and lighting, junior college district, mosquito abatement and other stuff is added to to the base which raises it up a little bit. Not by a full quarter though unless you have a CFD (communities facilities district) aka Mello - Roos - thrown in which can add even more than a quarter. For example, I pay about 3600 in property tax based on my assessment and I have anothe $1440 added for mello roos so my tax rate on my own house is about 1.4% . It is different for every house, every buyer, every situation.... So for advice column purposes a range of 1 to 1.5% makes sense. You will want to get an estimate for the property in question at the price you are buying it at when the time comes to do due diligence on your accepted offer.
0 votes Thank Flag Link Mon Jul 12, 2010
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Nancy,
Your property tax rate can be determined by looking at the tax bill or going on line to the county assessors site and looking it up there, generally there is a basic rate and then additional bonds or fees depending on the property location. The value of the property was determined by the original purchase price and then increases annually as allowed by law. If you have inherited the property, check with your tax advisor or attorney to see how the value will be determined.

The income tax rate on a rental property is going to depend on your financial circumstances, consult your tax advisor.
0 votes Thank Flag Link Mon Jul 12, 2010
Since you own the property already, you can find out your existing tax rate by reading your bill. If you can't find that, anyone can look up their tax bill at the county assessor's office online, or by phone.

By free and clear, I am assuming you have no mortgage on the property. That information is relevant for considering income tax advantages to owning real property, not in terms of taxes directly paid on the property. On income taxes, they have recently removed the passive loss deduction of up to $25,000 allowed each year...if you make more than $125K in income. So as of 2009, if you had expenses you could write off, like interest paid on a mortgage or taxes over and above what was received in rental income, as well as depreciation, those deductions may no longer be valid. Speak with your tax professional on your personal situation to see how that applies to you.
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Sun Jul 11, 2010
Hi Nancyginger:

Right, whether you have a loan or not, you still have to pay property taxes for services provided by the State
and Town.

Generally, in California it is 1.25% of the Purchase Price .

Good luck.
Perry
Web Reference: http://www.ruthandperry.com
0 votes Thank Flag Link Sat Jul 10, 2010
Hi Nancyginger,

As your profile has you as a "Home Buyer" I will assume you are trying to determine what your annual property tax will be for a home purchase. Your question is exactly why I wrote the following blog post to explain how the TOTAL tax bill is calculated: http://www.trulia.com/blog/steve_ornellas_mba_re_mastersgri/…

Property taxes are based on 1% of the purchase price. There a few other items that can increase the bill as well.

Best, Steve
0 votes Thank Flag Link Sat Jul 10, 2010
The amount of property tax that you pay on a property in California has nothing to do with whether the property has a loan against it or not.
0 votes Thank Flag Link Sat Jul 10, 2010
Same as it was before it was free and clear (lol)... sorry. there is no escaping Uncle Sam
0 votes Thank Flag Link Sat Jul 10, 2010
The same as a mortgaged property. It's based on the sales price, which generally works out to be about 1.25%.
0 votes Thank Flag Link Sat Jul 10, 2010
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