California Property Taxes: Build a Budget for the Home You Buy

The seller's bill is a clue rather than your forecast

California property taxes depend on assessed value and charges for the particular parcel. A long-time owner's bill can be much lower than the bill after a new purchase. Before settling on a monthly housing budget, request an estimate that reflects the transaction and the actual property.

Keep the assessor and tax collector's roles straight. Assessment questions concern the taxable value and exclusions. Billing questions concern amounts due, deadlines and payment records. An estimate in a mortgage application does not replace either office's determination.

What Proposition 13 does and does not limit

Proposition 13 generally limits the basic property-tax rate to 1% plus voter-approved bonded debt. The factored base-year value generally increases by the applicable inflation adjustment up to 2% annually. A change in ownership or qualifying new construction can lead to reassessment. The total tax bill is not universally limited to 2% annual growth. BOE: Proposition 13 and decline-in-value assessments.

Local assessments and other charges need separate review. An effective county average cannot identify a parcel's Mello-Roos or other special charges. Obtain the detailed bill and relevant disclosures, then ask which charges may change after purchase.

Prepare for reassessment and supplemental bills

County assessors review transfers to determine whether a change in ownership has occurred and an exclusion applies. A purchase commonly results in a new market-value assessment. Gifts, inheritance and ownership changes also need review rather than an assumption that only sales matter. BOE: Change in ownership.

A supplemental assessment accounts for a qualifying change between annual assessment cycles. It can produce a bill in addition to the regular bill. New construction can also produce supplemental assessments. Ask who will pay these bills and whether the servicer's escrow plan includes them. BOE: Supplemental assessments.

Review relief and appeals through the county

Proposition 19 has separate provisions for qualifying base-year-value transfers and certain family transfers. Age, disability, disaster status, occupancy, property value and filing requirements can affect the outcome. Request a county review before relying on an exclusion or transfer in your purchase budget. BOE: Proposition 19 requirements.

A temporary Proposition 8 reduction is different from a permanently changed base-year value. When market value recovers, an assessment in that status may rise more than 2% while remaining subject to the factored base-year-value limit. If you disagree with an assessment, ask the county about informal review and the applicable appeal deadline. Keep the notice and evidence of value.

Keep the housing budget current

• Confirm the parcel number on every bill.
• Calendar the actual installment deadlines and any supplemental due dates.
• Compare the escrow analysis with the tax bill after reassessment.
• Save written exemption or exclusion decisions.
• Retain cash for changes that have not yet reached the monthly mortgage bill.

ECHL can help explain how a tax estimate affects a mortgage comparison. The county determines assessments and tax relief. A smaller escrow collection does not reduce the underlying tax obligation.