California property taxes are, in simple terms, a beast. For both buyers and sellers in California, there can be some confusion about who pays how much in property taxes and when. Because the tax assessor’s office works 4-6 months ahead to be able to process everyone’s real estate, there is some lag time in updating the rolls. In the guide below, we break down the top questions. We also work through some example scenarios to help both buyers and sellers understand their property tax responsibility.
When are California property taxes due?
California property taxes are paid in two installments:
- The first installment is due November 1, and is considered delinquent if not paid by December 10.
- The second tax installment is due February 1, and is considered delinquent if not paid by April 10.
The full detailed property tax calendar can be found here.
Who is responsible for the property taxes?
By California law, whoever owns the property on January 1st of the current calendar year is responsible for taxes up until the close of escrow date. Once the close of escrow is completed, the new owner is responsible for that year’s property taxes at a prorated amount. The following graphic breaks it down for you. Learn more about property tax benefits here.
What is the property tax rate in San Mateo County?
California property taxes are taxed at a rate of 1%. The property tax rate in San Mateo County is 0.56% of the fair market value of the home. It is based on the sale price you paid. But you will likely pay more in taxes than the 1% because of the voter-approved taxes to benefit things like schools, water, roads, etc. The average property tax bill includes voter–approved rates that total about one–tenth of 1 percent of assessed value.
Prop 13 of the California tax code means your property taxes cannot increase more than 2% year over year unless the home sells and changes ownership. Even if home prices around you are increasing rapidly as we often see, your property tax bill should remain fairly stable and only increase incrementally.
A homeowner bought a house for $330,000 in 1991. They only paying property taxes on an assessed value of $530,000, even though they could sell their home for $1.5 million in today’s market.
Your First Property Tax Bill on Your New Home
You buy a home and pay the taxes upon closing. But guess what – you still have a property tax bill for the year! Why? Because the county tax assessor works 4-6 months in advance most likely they’ve already accessed the property before you’ve started the home-buying process.
Here’s where we see the confusion. We often find the California property tax bill will either be addressed to the previous homeowner (so the buyer ignores the bill). Or it gets forwarded to the previous owner’s new address, so the buyer never sees the bill. Even so, you as the buyer are responsible for logging on to the county tax assessor’s website to pay the property taxes. This is even if you don’t receive a bill in the mail. San Mateo County Tax Assessor’s office can be found here. You can find it here if you live in Santa Clara County.
Do not get comfortable with the first-year tax bill. It will not be an accurate tax rate going forward. California property taxes are based on the original sale price of the home. They increase no more than 2% year over year. Your first-year property tax bill on your house will actually be based on what the seller originally bought the house for. And not what you bought it for.
Not only will the tax bill be based on a lesser sale price, but it will also be prorated to the day you close on the home. Then the next year, the county updates the roll with the new purchase price. They give you a supplemental tax bill to cover the difference.
You purchase a home for $3 million with a closing date of June 15. The previous homeowner purchased the home for $1.5 million in 2012. You pay 1.2% of the purchase price in taxes upon closing. But, you’re also responsible for the prorated amount of the full tax bill from June 15 through November 1.
Do I still have to pay property taxes if I’m selling my home?
For sellers in California, you are responsible for having to pay the property taxes up until the close of escrow. Even if that close falls very close to the installment due date.
If you are selling your home for $2.7 million with an escrow close date of February 20th.
- Seller pays 100% of the February 1 installment.
- Seller pays 20 days of the prorated tax rate for the next installment.
California Proposition 19
California Proposition 19 is also known as the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act. It is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parent(s) ONLY if the property is the principal residence of the parent(s) and the child or children make it their principal residence within one year.
Please reach out to JJ Team Homes for more information on California Property Taxes
We know there are many more questions you may have on escrow, taxes, and the breakdown of responsibility among buyers and sellers. Please reach out to JJ Team Homes for any questions or comments you have. We want to walk you through this process to make it as easy as possible. And get you into your dream home.