All property tax values in California trend from 0-2% every year, this percentage increase is from on the Consumer Price Index that gauges inflation. Usually, California taxpayers pay about 1.25% of their assessed value in actual property taxes per year. For example, if you bought your home for $100,000, your base value would be $100,000. Since you pay about 1.25% of the assessed value, your property tax bill the first year would be approximately $1,250. The property tax bill for the first year will be pro-rated for the part of the year you owned the residence and/or you would get credit in escrow for the amount the prior homeowner owed.
California residents the property tax base value is capped unless there is a re-assessable event, the only variation is the two percent trend based on Proposition 13. So the second year the increases would max out at a $2,000 increase based on the 2% limit. The assessed value increases from $100,000 to $102,000 which means the property taxes increase from $1,250 the first year to $1,275 the second year. The 2% increase compounds over time, so the amount that it goes up also increases over time since the assessed value compounds. Some years the percentage is less than 2%, based on the Consumer Price Index.
At times, when certain exemptions apply to your assessed value, it will not increase annually. If a house has a Proposition 8 decline in value (temporary decline in value because market decline) the value will not trend. The assessed value will be evaluated annually by the Office of the Assessor to decide if it should be modified. Similarly, if there is a Disaster Relief exemption also called Misfortune and Calamity applied to a home the assessed value will not increase, instead the Assessors Office will visit the house every year to see the residence repairs and will either adjust the value or leave it depending on what has been constructed. Also, most exemptions for the disabled and/or veterans do not trend either. Generally, your base value will increase up to 2% per year every year unless an exemption that applies.
Generally speaking though most houses in California will trend annually and as a result of this each homeowner will have a slight trend in property taxes every year. What happens over a period of about thirty years is your assessed value will more than double. For example, my parents bought their residence in 1979 for $80,500 and the current assessed value for that property based on the $80,500 thirty years ago is $138,783 so in thirty years they went from paying $1,006 per year to $1,734 per year. If you start out with a property tax base of $500,000 in thirty years your assessed value will be $887,922 which means you will start off paying $6,250 per year and in thirty years be paying $11,099 per year!
If you can lower that property tax base you will save thousands in the long run! If you bought your house for $500,000 and today your residence is only worth $300,000 you will save thousands! With a $300,000 tax base you will pay $3,750 per year and in thirty years your assessed value will be about $532,753 so you will pay about $6,659 per year in property taxes. Don’t settle for the temporary reduction in value the Assessor is offering right now called Proposition 8 Decline in Value. So PERMANENTLY lowering your property tax base by $200,000 will save you EVERY year you own your residence! The California Little Black Book shows you how!
About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.