How are your property taxes calculated?

One of the main expenses to consider when purchasing a new home are the property taxes you will pay every year as the owner.  But how do you know how much to budget for?

Thanks to the passage of Proposition 13 in 1978, all California property taxes are now assessed at 1% of the purchase price.  Each year thereafter, tax increases are limited to no more than 2% per year.  When a property is sold, it is then reassessed at market value (the sales price), but the rate remains at 1% of this sales price and the new owner is protected by the 2% cap on annual increases.

Exceptions to the 2 percent cap rule: There are exceptions to the 2% cap on annual property tax increases, including:

A. If the property is sold to a new owner.

B. If additions or major remodeling enhances the value, then the tax assessor can increase your property-tax basis. Presuming that you got a building permit, the building department will notify the assessor of the addition and the assessor will increase your tax assessment accordingly. The increase will show up in future tax bills, prorated from the date of completion. There may be one supplemental tax bill depending on when the date of completion falls within the tax year.

In order to determine the full amount of your tax bill, use the simple formula depicted below:

If you would like to know how much the voter approved bonds, Mello-Roos fees (if there are any), and special assessments are for a particular property, contact me directly at (760) 420-8642 or michelle.schwartz@coldwellbanker.com and I will get this information for you.