It’s just about that time again: California property taxes are due and that means homeowners can expect a bill. Property owners have until April 10 to get their payments in before the county assesses a 10 percent penalty. To avoid paying more fines, homeowners should be aware of the state and county property tax system and how taxes are calculated and assessed.
Here’s what you need to know about California property taxes.
Californians pay property taxes twice a year in two equal instalments. The tax system follows California’s fiscal year, which ends on June 30. The payment for the first half of the year, running from July 1 to December 31, is due November 1. The payment for the second half of the year, which runs from January 1 to June 30, is due March 1. Homeowners have a little extra time to get their payments in. If you are a California homeowner, you have until April 10 to pay your tax bill. Failure to pay by April 10 result in a 10 percent penalty.
In California, both state and local governments play a role in how property taxes are determined. Each of California’s counties has a tax assessor who determines the taxable value of property. The tax assessor is responsible for applying any legal exemptions which apply for property owners. Once the tax assessor has created a tax roll showing the assessed values, the county controller or auditor will calculate the amount due. Your actual tax bill comes from the county tax collector.
The State Board of Equalization has oversight of the county tax assessors. It also gives county tax officials guidelines to ensure they follow the law when they asses California property.
California’s property owners pay a tax of 1 percent on the value of their property. The amount is calculated by multiplying the property’s assessed value by the tax rate of 1 percent. The base value year is determined by the date the homeowner purchases the property, based on the sales price.
Under California law, a property’s value cannot increase more than 2 percent each year, which prevents real property taxes from skyrocketing. However, the tax usually increases by the permitted 2 percent every year. If the value increases by 2 percent, homeowners are taxed on 1 percent of the new value of the property.
Many homeowners are surprised when they receive a bill for extra property taxes after buying a new property. This is called a supplemental tax bill. In California, when property changes hands, the value of the property is reassessed. The new owners are then given a supplemental tax bill which covers the difference between the prior assessed value taxes and the newly assessed value of the property at the time of the sale. Homebuyers can expect to get a supplemental property tax bill within a few months of buying the property.
It is easy to miss this bill, since it is not sent to the mortgage servicer like the annual property tax bill. Supplemental tax bills are sent directly to the property owner. Since it will not be paid through your escrow account, you should be sure to budget for the supplemental tax bill when shopping for a new home.
Homeowners typically make home improvement projects to make their home more livable and boost its resale value. If you made renovations last year, the renovations may impact your new taxable value. To determine how your home improvement projects will impact your taxes, you need to factor in when construction was completed. If, for example, you completed a kitchen renovation in January, with six months left in the fiscal year, the first six months will be taxed at 1 percent of the original value of the property. The next six months will be taxed at 1 percent of the new value, factoring in the home improvements.
California uses special initiatives used to fund local projects. Special initiatives are approved by voters in local elections. These taxes can be imposed by the county, city, or town where you live. A “parcel tax election” is used to fund schools, infrastructure, salaries of local government employees, and other projects.
A parcel tax is considered a property tax because it must be paid by people who own real estate - which are considered parcels or units. However, parcel taxes are not based on the assessed value of the property. Instead, parcel taxes are assessed on characteristics of the property, such as whether it is commercial or residential, or improved versus unimproved. The amount of a parcel tax can also be determined by the square foot of a dwelling unit, or it can simply be a flat rate.
In California, parcel taxes are collected on behalf of public school districts.
If you are a California resident who owns recreational vehicles, airplanes, boats, or other luxury items, they may be taxed. However, keep in mind that the California real property taxes are separate from personal property taxes, which are imposed by the state on personal property.
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In 2018, Danielle Lazier + Associates sold over $104,000,000 in SF Bay Area residential real estate selling more homes than any other SF Realtor (per MLS). We specialize in listing marketing and home buyer representation. We work with a diverse clientele in terms of budget, property type, and location, but one thing remains consistent: our clients have a clear goal to maximize their San Francisco real estate investment and want us to help them because we deliver both results and an enjoyable experience.
