California Property Taxes - Updated 2024

California Property Tax Overview

Property taxes in California are based on the assessed value of a property, with a maximum tax rate of 1% due to Proposition 13. The assessed value is determined annually by the county assessor's office, and can only increase by a maximum of 2% per year unless there is a change in ownership or new construction.

The property tax rate of up to 1% is applied to the assessed value to calculate the annual property tax owed. This tax revenue funds local services like schools, police departments, fire departments, libraries, parks, and other community infrastructure.

So in simple terms, property taxes are annual taxes paid based on the assessed value of your property, with rates capped at 1% maximum and assessed values restricted from increasing too quickly each year.

California Property Tax Rates

The maximum property tax rate in California is set at 1% of the assessed value of the property due to Proposition 13, which was passed in 1978. However, the actual tax rate can vary from county to county and property to property based on additional voter-approved taxes.

While the statewide base rate is 1%, counties can levy additional taxes for voter-approved bonds and special assessments. For example, in Los Angeles County, the total property tax rate is around 1.25% when you factor in taxes for schools, vector control, and other county measures. In San Francisco, the rate is closer to 1.2%.

The tax rate for a specific property is also impacted by whether it is a primary residence, rental property, or commercial property. There are different rates and exemptions that can apply. Additionally, the assessed value that the tax rate is applied to is a key factor. Assessed values can only increase by a maximum of 2% per year for properties that have not changed ownership.

When a property is purchased, it is reassessed at the current market value, leading to a higher assessed value and property tax amount in the first year of ownership. So while the maximum rate is 1%, the effective tax rate can vary significantly from property to property based on assessed value, location, and type of property.

Proposition 13 and Property Taxes

Passed by California voters in 1978, Proposition 13 dramatically reshaped the state's property tax system. Prior to Prop 13, property taxes were based solely on the current market value of the home, resulting in rapidly increasing tax bills for many homeowners during California's housing boom of the 1970s. 

Prop 13 brought two major changes:

1. It capped the property tax rate at 1% of the assessed value at the time of purchase. So for a $500,000 home, the maximum annual property tax would be $5,000.

2. It restricted annual increases in the assessed value to 2% per year until the property is sold. This prevents big tax hikes just due to market factors.

The impact was significantly lower property tax bills for existing homeowners, providing tax relief. However, it also meant less revenue for cities and counties relying on property taxes to fund services. New homebuyers faced a higher tax burden based on purchasing a home at current market rates.

Overall, Prop 13 has kept California's effective property tax rate relatively low compared to other states. But it has also created disparities where two identical homes can have vastly different tax bills based on when the homes were purchased.

Calculating California Property Taxes

The formula for calculating your property tax bill in California is relatively straightforward:

Assessed Value x Tax Rate = Annual Property Tax Bill

The key factors are the assessed value of your property and the tax rate applied to that value.

In California, the maximum allowable tax rate is 1% of the assessed value, as mandated by Proposition 13. However, this 1% rate is actually the combined total of several tax rates from various jurisdictions:

• County General Tax Rate (around 1%)
• Any City Tax Rates 
• School District Tax Rates
• Special District Tax Rates (ex: fire, library, etc.)

While the overall rate cannot exceed 1% of assessed value, it may be slightly lower than 1% in some areas.

To calculate, simply take the assessed value of your property and multiply it by the combined tax rate percentage. For example:

Property Assessed Value: $500,000

Combined Tax Rate: 0.92%**

$500,000 x 0.0092 = $4,600 Annual Property Tax Bill

Your county tax bill will break down the various jurisdictional tax rates that make up your overall rate. The assessed value is capped at increasing just 2% per year for an existing homeowner under Prop 13 rules.

So while the formula is simple, understanding your specific assessed value and local tax rates is key to calculating your actual California property tax liability each year.

California Property Tax Assessments

Property taxes in California are based on the assessed value of the property as determined by the county assessor's office. The process for assessing properties involves:

• An in-person inspection and appraisal when a property is purchased, newly constructed, or has a major addition. 
• Analysis of recent comparable sales in the area to estimate fair market value.
• Application of assessment ratios based on property type (e.g. single family home, multi-unit, commercial).
• For properties not changing ownership, assessed values can only increase by a maximum of 2% per year under Proposition 13.

The county assessor is responsible for determining the taxable value of all properties on an annual basis. Notices of assessed value are typically mailed out in the summer. Owners can review the details and appeal the assessment if they feel it is excessive compared to market value.

Under Proposition 13, a property's assessed value is reset to market value when it is purchased. This establishes the new base year value. In subsequent years, the assessed value can only increase by a maximum of 2% per year until the property is sold again. This acquisition value system helps limit dramatic tax increases for long-term homeowners.

Property Tax Exemptions

In California, there are several property tax exemptions available that can reduce the amount of taxes owed on a property. The most common exemptions include:

Homeowner's Exemption

If you own a home and use it as your principal place of residence on January 1, you may be eligible for a $7,000 reduction in the taxable value of your property. This exemption results in annual tax savings of around $70 to $90 for most homeowners.

Disabled Veterans Exemption

Veterans with certain rated service-connected disabilities may be eligible for exemptions on the taxes for their principal residence. The level of exemption depends on the disability rating percentage, ranging from $100,000 to $205,996 in exempted value for 2022.

Charitable Organization Exemption

Properties used exclusively for charitable purposes owned and operated by qualifying non-profit organizations are fully exempt from property taxes in California. This includes churches, hospitals, private schools, and more.

Other exemptions are available for properties owned by government agencies, low-income housing organizations, religious organizations, and more. Senior citizens, blind persons, and disabled persons may also qualify for deferral programs that allow delaying payment of property taxes. The requirements and application processes vary for each exemption.

California Tax Payment Deadlines

Property taxes in California are paid in two installments. The first installment is due on November 1st and delinquent after December 10th. The second installment is due on February 1st and delinquent after April 10th. 

If you prefer to pay the full tax amount upfront, the entire year's taxes can be paid by December 10th. Many counties also offer installment payment plans that allow you to pay taxes on a monthly or bi-monthly schedule, with a small service fee.

Failure to pay property taxes on time results in penalties and interest charges. A 10% penalty is added for delinquent payments, plus additional fees are tacked on after June 30th if the taxes remain unpaid. Ultimately, if property taxes go unpaid for 5 years, the county can initiate tax sale proceedings to collect the delinquent amount.

Paying Property Taxes in California

Property taxes in California are typically paid in two installments. The first installment is due on November 1st and the second installment is due on February 1st. Alternatively, property owners can opt to pay the full tax amount by April 10th.

There are multiple ways to pay property taxes in California:

Online Payment

Most counties offer an online payment option through their website. This allows you to pay your property taxes electronically using a credit/debit card or echeck from your bank account.

Pay by Mail

You can mail a check or money order along with the payment stub from your property tax bill to the address listed for the County Tax Collector's Office.

In-Person Payment

Many counties have physical payment locations where you can pay your property taxes in person, either by cash, check, credit card or money order.

It's crucial to pay property taxes on time to avoid penalties and interest charges. If you miss the April 10th deadline, you'll start accruing penalties of 10% plus additional charges. Some counties offer payment plan options if you need to spread out the payments over time. Check with your County Tax Collector's Office for available programs.

Appealing Your Property Tax Assessment

If you believe the assessed value of your property is too high, you have the right to appeal and potentially lower your property tax bill. The process typically starts by contacting your county assessor's office and requesting an informal review of the assessment. 

During this review, you'll need to provide evidence that your property's market value is lower than the assessed value used to calculate your taxes. Useful evidence can include recent comparable home sales in your area, a professional appraisal, permits for any unfinished construction impacting value, or documentation of any issues like flood damage.

If the informal review doesn't result in a satisfactory adjustment, you can file a formal appeal with your county's Assessment Appeals Board or Board of Equalization. The deadline to file is typically 60 days after the county issues the annual assessment notice.

For the formal appeal, you'll submit an application along with your evidence of a lower market value. At the hearing, you can present your case in person or through a tax agent representing you. The Appeals Board will consider your evidence against the assessor's data before making a ruling to keep the original assessment or lower the taxable value.

Successfully appealing and getting a Proposition 8 reduction can provide property tax relief until the next reassessment restores the higher taxable value. However, the process takes some effort, so weigh the potential tax savings against your time and costs for compiling a strong appeal case.

New Homeowners

When you purchase a new home in California, the county assessor will reassess the property's value to reflect the current market value as of the sale date. This will likely result in a higher assessed value compared to the previous owners. 

In the first year after the sale, your property taxes will be based on this new reassessed value. This means your first property tax bill as a new homeowner will be significantly higher than what the previous owners paid.

However, thanks to Proposition 13, in subsequent years the assessed value can only increase by a maximum of 2% per year, regardless of how much the market value increases. So while that first tax bill stings, future years will have much smaller incremental increases.

One thing to watch out for is a supplemental property tax bill. Since the county initially bases your taxes on the previous assessed value, they will issue a supplemental bill later in the year to collect the difference between that amount and the new higher taxes based on the sale price.

So be prepared - your first year of California property taxes as a new homeowner will likely bring an unpleasant sticker shock with a high initial bill followed by a supplemental bill a few months later. But after that first year, your annual increases will be much more modest.

Commercial vs. Residential Properties

Commercial properties in California are assessed and taxed differently than residential properties. In general, commercial properties are taxed at a higher rate than residential properties.

The key differences are:

Assessment Methods

Residential properties are assessed based on their purchase price with the value increasing by no more than 2% per year under Proposition 13. Commercial properties, however, are reassessed annually to current market value. This often results in higher assessed values for commercial properties.

Tax Rates

While both property types have a maximum tax rate of 1% of assessed value, commercial properties frequently have additional local taxes and fees tacked on by cities and counties. These can increase the effective tax rate significantly above 1%.

No Homeowner's Exemption

Residential homeowners in California can claim a homeowner's exemption that reduces their taxable assessed value. This exemption is not available for commercial properties.

Larger Properties, Higher Taxes

Since commercial properties like office buildings, shopping malls, and industrial facilities are often much larger than homes, their total assessed value and resulting tax bills tend to be substantially higher even at the same tax rate.

The higher taxes on commercial properties aim to account for their larger footprint, higher demand on municipal services, and ability to deduct property taxes as a business expense. However, it adds a significant cost burden for businesses operating in California.

Historical Trends

Property tax rates in California have undergone significant changes over time, particularly with the passage of Proposition 13 in 1978. Prior to Prop 13, property tax rates varied widely across counties and cities, with some areas having rates as high as 2-3% of the assessed property value. This led to rapidly increasing tax bills for many homeowners as property values escalated.

Proposition 13 was a landmark ballot initiative that amended the state constitution to cap property tax rates at 1% of the assessed value at the time of purchase. It also restricted annual increases in the assessed value to an inflation factor of no more than 2% per year. This provided tax relief for longtime homeowners by preventing large tax hikes driven solely by rising home values.  

In the years after Prop 13's approval, the average effective tax rate in California dropped substantially from over 2% to around 1% for most properties. However, new homebuyers end up paying property taxes closer to the full 1% rate based on their purchase price assessment. Decades later, this has created disparities where identical homes on the same street can have vastly different tax burdens based on their year of purchase.

While Prop 13 remains in effect today, the legislature has periodically tweaked certain provisions over the years. But the core tenets of capping tax rates at 1% and limiting annual assessment growth have remained intact since 1978, providing tax certainty for California property owners.

Comparing to Other States

California's effective property tax rate is relatively low compared to many other states across the nation. While the maximum statutory rate of 1% may seem high, the limited increases due to Proposition 13 result in lower effective tax rates over time for long-term homeowners.

According to data from the Tax Foundation, California had the 33rd highest effective property tax rate in the nation in 2022 at around 0.76%. This places it below the national average effective rate of around 1.1%. States with the highest effective rates include New Jersey (2.13%), Illinois (1.97%), and New Hampshire (1.86%).

Many states have higher statutory maximum rates than California as well. For example, New Jersey has a maximum rate of around 2.5% while Texas allows rates up to 2%. However, these maximums don't account for limitations like Prop 13 that keep assessed values and effective tax rates lower over time for existing properties.

So while the advertised 1% rate may seem steep, California's unique property tax structure results in a lower overall tax burden compared to many other parts of the country for those who have owned their homes for many years. However, new homebuyers will generally see higher effective tax rates initially before those rates start getting capped in future years.

Additional Local Taxes

Many cities and counties in California levy additional taxes on properties beyond just the base property tax rate of up to 1%. These supplemental taxes help fund specific services or projects within the local area.

Some common additional local taxes include:

Parcel Taxes

Flat fees charged per parcel of property that go towards funding schools, parks, libraries, and other civic services.

Mello-Roos Taxes

Special taxes applied to properties within designated community facilities districts to pay for infrastructure like roads, sewers, and public amenities.  

School Bonds

Bond measures approved by voters that increase property taxes temporarily to fund school construction and renovation projects.

Vector Control Taxes

Small fees charged to fund mosquito abatement and vector control programs.

Lighting & Landscape Taxes

Assessments paid by property owners in certain areas to maintain public landscaping, lighting, and related services.

The amount of these supplemental taxes can vary significantly between cities and counties. They are listed as separate line items on the annual property tax bill in addition to the base 1% rate. Property owners should check with their county assessor's office for details on any additional local taxes applied in their area.

Resources

When it comes to understanding and managing your property taxes in California, there are several key resources to utilize:

County Assessor's Office

Each county has an Assessor's Office that handles all aspects of property tax assessments and administration. This should be your first stop for any questions, forms, or issues related to your property taxes. They can provide you with details on your specific assessment, exemption applications, appeal procedures, and payment information.

County Website

Most counties have online portals that allow you to view your property tax bill, payment history, and assessment details. Many also provide downloadable forms for exemptions, appeals, and other processes. The website is a convenient way to access tax information and submit requests from home.

Tax Calculators

To estimate your annual property tax bill, many county websites offer online tax calculators. You can input your home's assessed value and see the projected taxes based on the county's tax rates and any applicable exemptions.

Appeals Process

If you disagree with your property's assessed value, you can file an appeal with your county's Assessment Appeals Board. The appeal process, forms, and documentation requirements are outlined on the county's website.

Exemption Forms

Common property tax exemptions in California include the Homeowner's Exemption, Disabled Veterans Exemption, and exemptions for charitable organizations or low-income households. Application forms and eligibility criteria are available through the Assessor's Office.

By taking advantage of these resources, you can stay informed about your property taxes, understand the assessment process, apply for any exemptions you qualify for, and ensure you are paying the correct amount each year.