California Property Taxes
As a major source of state revenue, California’s property taxes stay at the local level and fund the budget of most local governments. As residents, a California Property Tax bill will include different taxes and charges based on your situation and where your property is located. Here are some of the most common:
The 1 Percent Rate
Established by Proposition 13 in 1978, it was designed to limit property taxes and limit the increases in the assessment of property values. This bill was a great help to older homeowners, preventing them from being “priced-out” of their homes due to excessive property taxes.
It imposes an annual 1% tax on the assessed value of all “real” property… including:
- Owner–occupied residential properties in which homeowners receive an exemption of $7,000 from the assessed value of their primary residence each year.
- Investment and vacation residential properties other than those used as a primary residence, including multifamily apartments, rental condominiums, rental homes, vacant residential land, and vacation homes.
- Commercial retail properties, industrial plants, farms, and other income–producing properties.
This system uses an “ad-valorem” method where the county government assigns an assessed value equal to the purchase price, or what’s called the “acquisition value.” Each year onward, the property’s assessed value increases by 2 percent or the rate of inflation, whichever is lower.
The process continues until the property is eventually sold. At that point, the county assessor assigns it a new assessed value equaling its recent purchase price.
Assessed values can also be reduced when market values fall sharply in times of market declines or when property damage occurs. Otherwise, a property would be taxed at a higher value than its actual worth. In such cases, the county assessor will reduce the property to its current market value.
Under Prop 13...
A 1% tax is levied on a property’s assessed value, which will always be reestablished to market value when it is sold… based on what the buyer actually pays for it. Otherwise, the assessed value of the property steadily increases by a maximum of 2 % per year.
San Diego Property Tax Information Lookup
- Search Property tax base information on any property in San Diego County with a parcel #
- Property Tax Lookup Link for San Diego County Properties
- Typical Tax Rates For San Diego County Cities– * If you do not know the Tax Rate Area for which you want a tax rate, the following table lists a typical Tax Rate Area for each city in San Diego County.
Enter Assessor Parcel Number (APN) or Street Address and zipcode to search property tax related information.
There are 2 additional propositions that are a particular benefit to senior homebuyers.
- Proposition 60 – passed in 1986, allows homeowners over the ages of 55 to transfer their existing assessed value of their current home to a new home. However, the new home must be of equal or lesser market value, and within the same county.
- Proposition 90 – passed in 1988, this bill simply extended the same allowance for homeowners as Prop 60… to transfer their existing assessed value to a new home with the same or lesser value, but this includes homes located in different counties that also participate in Prop 60 and Prop 90.
Both Prop 60 & Prop 90 allow senior homebuyers to continue at their existing home’s assessed value, potentially offering huge savings on annual property taxes.
For other property taxes, the same method for assessing the value of a home or “real” property is also used and is the key to determining the property tax bill. However, different tax rates are used. This includes:
Local Voter-Approved Debt
Mostly used to fund local infrastructure projects, including the construction and rehabilitation of schools, most local governments need to obtain 2/3 of local voter approval to issue general obligation bonds.
Typically, property owners are subject to several voter-approved debt rates on their property tax bills. This is because local voters have approved bond funds for projects like the city and water, school, and community college districts where their property is located.
The rates are usually a very small percentage of assessed property value. And for example, the average property tax bill for voter–approved debt rates totals about one–tenth of 1 percent of assessed value (or 0.1%).
Other non-ad valorem taxes exist, where the taxes and charges are based on factors other than the assessed value of the property.
Some are based on a cost of a service performed on the property and others are based on the size of a parcel of land, square footages, number of rooms and other characteristics. The 3 most common are:
Local governments impose assessments in order to fund improvements that provide a direct benefit to the property owner, and not for general public benefits. An example would be construction and operation of street lighting in a particular neighborhood.
The local government needs to have a majority approval of the affected property owners… and each property owner’s vote is weighted equally in proportion to the amount that they would pay for the proposed improvements.
Parcel tax rates are set by local governments based on fixed amounts of parcels of land, or per room or even per sq. foot per parcel. The proceeds of these taxes can only be used on public programs, services or projects, even those which do not directly benefit the parcel of land. Two-thirds approval of all voters is required.
Mello-Roos (Community Facilities District CFD)
These are taxes collected in specific geographical area determined by local official and often in new communities. These are a flexible source of revenue that can be used to fund infrastructure projects or services, and they can be levied in proportion to the benefit a property receives in 2 ways:
- Equally across all parcels receiving the benefit
- Proportionally by square footage of the propertyGenerally, these taxes fund commercial and residential development. And after the land is developed and sold, the new owners are responsible for the tax which is then used to fund schools, libraries, police and fire stations, or other necessary public facilities and services in the new communityThese taxes are subject to two-thirds voter approval when 12 or more voters reside in the specified area.
What is the average property taxes in California?
Property taxes in California vary depending on the counties the property is located in. On average, you will find property tax rates right around 1% of the assessed value up to 1.75%- 2.00% of the assessed values in some special cases, especially when you add other property related fees such as Mello Roos (Community Facilities District) and other bonds. As an example, most homeowners in County of San Diego in California pay around 1.10%-1.30%.
Ordinarily, when the ownership of California real property changes, the property is reassessed at its current fair market value and the new owner pays property tax based on the reassessed value. However, the law provides certain exemptions from reassessment and, in certain instances, allows a taxpayer to transfer the base-year value of the property to a subsequent property without being reassessed. This article will review some of the basic exemptions from property tax reassessment which are likely to be relevant to a real estate licensee’s practice or address likely concerns of clients.
Readers should consult their own professional tax advisors when faced with situations not discussed in this article as not all exemptions are discussed here.
Additional Reading Links:
- Property Tax Assistance for Seniors – Sale and Replacement of Principal Residence by Taxpayers 55 Years of Age or Older – There is a property tax reassessment exemption for taxpayers 55 years of age or older
- Property Tax Exemptions from Reassessment‘
- Transfers Between Parents and Children and Between Grandparents and Grandchildren
- Appealing Taxes –
- More Information on California Property Taxes – http://www.boe.ca.gov/proptaxes/pdf/pub29.pdf
Readers who require specific advice should consult an attorney. The information contained herein is believed accurate as of December 11, 2012. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney.