California property taxes explained here include California’s Proposition 13 and the Supplemental Taxes. In addition, several other California Propositions provide exceptions for family member transfers and senior citizens.
California Property Taxes Process
The State of California’s fiscal year runs from July 1st to June 30th. The counties assess and collect the property taxes.
Property tax collection occurs in two equal installments. The first installment covers July 1st through December 31st with the payment due by November 1st which becomes delinquent on December 10th. Payment not received (regardless of postmark date) by 5 p.m. on the delinquent date assess a 10 percent penalty. Penalties keep increasing substantially if not fully paid by June 30th.
The assessed value of the property determines the amount of tax. During the first full fiscal year of property ownership, most homeowners pay one percent of the sales price. However, see Supplemental Tax below.
Every year, the property’s value may be adjusted by the county assessor to account for inflation. However, the maximum upward adjustment can only be two percent.
Some communities may levy additional assessments due to voter-approved bonds. Such bonds typically provide funding for transportation needs, pay for schools, local parks, sanitation districts, and water supplies. Additional assessments amount to .25 up to .50 percent added to the tax bill.
Read more information regarding the California Property Tax and the Supplemental Property Taxes from The University of California.
California Supplemental Property Tax
In addition, a supplemental tax bill is sent to new homeowners after the closing of escrow. The supplemental tax is based on the difference between the seller’s value according to the current tax rolls and the new value at the time of the sale determined by the sales price. The amount due is prorated over the remaining months of the fiscal year.
For example, a property’s old assessed value was $150,000 before its sale for $200,000. The $50,000 difference subject to the supplemental tax is paid by the buyer.
If the property reassessment shows a lower value, the new homeowner receives a refund from the supplemental taxes already paid.
California Property Tax Exemption
California’s Constitution provides for a principal place of residence Homeowner’s Exemption reducing the assessed value of the home by $7,000. This amounts to a savings of $70. Application for the Homeowner’s Exemption is made with the County Tax Assessor.
Senior Citizens Exceptions
California Propositions 60 and 90 allow homeowners 55 and older an exception to increases of their property taxes.
Seniors keep their current property tax obligations at the same level as long as their new property is equal or of lesser value than the original property sold.
Proposition 60 allows this exception for homes sold and bought in the same county.
Proposition 90 allows the sale of a house in a county opting to be part of this program and buying a house in another county also part of this program. The counties opting into Proposition 90 are:
- El Dorado;
- Los Angeles;
- San Diego;
- San Mateo;
- Santa Clara; and
California Family Members Exceptions
Two voter-approved propositions enable reassessment exceptions for homes transferred between family members. This means the supplemental tax will not apply.
Transfer of ownership of a home between a parent and a child creates an exception under Proposition 58.
Transfer of ownership between a grandparent and a grandchild comes under the Proposition 193 exception.
Qualifying for these exceptions requires:
- A principal place of residence was granted a Homeowner’s Exemption or Disabled Veteran’s Exemption prior to the transfer.
- No limits exist for the assessed value of the principal residence for an exception.
- On top of the principal residence tax relief, exceptions exist for other real properties with an assessed value up to $1 million for each property.
- A $2 million limit applies to marital community real property.
- Transfers by gift, sale, or inheritance qualify for the exception.
- Transfers between parent and children as individuals, between joint tenants, between grandparents and grandchildren as individuals, and individuals to trusts may qualify for the exception.
Not eligible for exception includes:
- Transfer of ownership by legal entities, aside from most trusts.
- Transfers from grandchildren to grandparents.
For more information, read the Guide to Proposition 58 & 193.
California Proposition 13
Normally, California property tax rates are established by the state legislature or a combination of state and local legislative bodies.
However, California voters approved Proposition 13 on June 6, 1978, reducing the property tax rate from three to one percent. In addition, Proposition 13 allowed for an increase for inflation of no more than 2 percent per year.
Three Types of California Property Taxes
California property taxes compose of three types of levies.
- General tax levy since 1978 remains at 1 percent of the assessed property value.
- Voter-approved bond debts cover the repayment of state and local bonds (usually requiring 2/3 majority of the vote); and
- Special district voter-approved assessments include local school and fire districts.
California Property Tax Rates Vary
Since Proposition 13 froze the statewide property tax rate at 1 percent plus a maximum of 2 percent per year between sales for inflation, the rates do not vary much. However, special district voter-approved assessments add small percentages to their property taxes.
In addition, the tax rate is only one of two components affecting the tax bill. The county assessment of the property’s value is the other.
Thus, the property tax bill is the result of multiplying the tax rate by the assessed value.
California determines assessed value by the property’s last sales price plus a maximum of 2 percent annual increases for inflation.
Average California Property Tax Rates
California property tax rates typically fall between 1.1 percent to 1.6 percent of its assessed value.
Calculating Property Taxes in California
California Property Tax Calculator
California’s overall property taxes are below the national average. The average effective (after exemptions) property tax rate in California is 0.79%, compared with a national average of 1.19%.
The California Property Tax Calculator provides a free online calculation of one’s property tax. Simply type in the property’s zip code and select the assessed home value. Instant results include the “Average Tax Rate Percentage” and the annual “Property Tax”. Also includes the average property tax rate in the specific county, the State of California, and nationally.
San Diego County
Property owners can easily search their tax bill by inputting their mailing address, parcel/bill number, or unsecured bill number. Then, they view the bill and select the installment and add it to their shopping cart for payment.
Los Angeles County
The Los Angeles County Assessor provides useful information explaining California property taxes on its website.
In addition, their website provides a Supplemental Tax Estimator calculator for Los Angeles County property owners. This provides estimated taxes for a recently purchased property.
California property taxes explained here includes Proposition 13 and the Supplemental Tax rates. In addition, the homeowner’s exemption along with Propositions 58 and 193 for family members exceptions also explained. Seniors under Propositions 60 and 90 also obtain exceptions.
Finally, links to San Diego and Los Angeles county assessors websites along with free calculators of the California Property Tax and the Supplemental Property Tax also provided.
Steven Rich, MBA – Guest Blogger
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