02 Nov What You Need To Know About Property Taxes
Today I’m starting a new tradition. I’m going to answer 30 questions in 30 days. Most won’t be this detailed, but today’s question is pertinent to what’s happening. I often get asked to clarify property tax amounts and deadlines, so I’ll be doing that in detail today.
At the close of escrow, your property taxes are prorated to the day you sold or bought. You’re only paying taxes on the time you own the property. However, the way taxes are timed and calculated can be confusing. The tax year runs from July 1 to June 30, but the bill comes in October. You can pay it in two installments. The first is due on November 1 and is late after December 10. The second installment is due on February 1 and is late after April 10.
If you buy a home in May, for example, your next bill will likely still reflect the previous owner’s tax for the property value. At that time, you will get a supplemental tax bill for the difference between what the seller’s property was assessed at and what your purchase price was. You’re only paying for the time you’ve owned it, but the county has to play catch-up for the incremental value on the property.
“The way taxes are timed and calculated can be confusing.“
Generally, the assessed value is the cash or market value at the time of purchase. This value cannot increase more than 2% per year until the property is sold. If the original owner purchased the home in 1965, you might have a larger supplemental bill because the assessed value that they were at could be really low.
Here is the answer to the first question of the 30 questions in 30 days.
In California, under Prop 13, the annual real estate tax on an annual property is limited to 1% of the assessed value and it can only be increased by 2% per year until it changes hands. The tax bill in the Desert (Palm Springs, Rancho Mirage, Palm Desert, Indian Wells, and La Quinta) varies by area but you’ll see about 1.25% in most areas. That accounts for school district fees, sewer, emergency, etc. A $1 million home will have a property tax of around $12,500 per year. In escrow, you can see the list of things you’re paying for on that property.
During the recession, we had lots of clients calling and asking for help to understand what their home’s real value was. Then they took that new value to the assessor appeals board and contested it, saying they’d like a lower value.
If you have any questions on taxes or buying or selling in the Desert, don’t hesitate to call or text me. I look forward to hearing from you.