How Often Do You Have to Pay Property Tax in California?
Updated: Dec 7, 2022
Along with perfect weather and a booming economy, the red-hot real estate market is one of the many things that attracts homebuyers to California. Housing prices have been steadily rising in the state for decades, making a home purchase a smart idea not only because of the incredible lifestyle it affords but because it is a strong financial decision with great returns on investment. Surprisingly, California homeowners also pay under the median average for property tax nationwide, which helps offset the other costs of living that can be higher than in other states.
Typically, property tax is paid twice a year, once in the Spring and once in the Fall. In California, the fiscal year is split into two halves, January 1st - June 30th, and July 1st - December 31st. Your property tax for the first half will be due by March 1st and considered late after April 10th, while the second half is due by November 1st and considered late after December 10th.
It’s easy to neglect your property tax bills, as they come due less frequently than other bills. However, this can lead to a penalty of 10% in California if the bill is considered late or delinquent, which can create serious financial issues. For this reason, it’s always important to set aside an amount in your budget for property tax, usually by dividing the total amount per fiscal year by 12 and setting aside that amount per month.
Everything You Need to Know About California Property Tax
Property taxes are known as ad valorem taxes, meaning they are calculated proportionally, or “according to value”. Property taxes in California are calculated using the price you paid at sale for the property, as this is considered to be the assessed value, and from that point on they will be increased every year proportionally to inflation in the state as determined by changes in the California Consumer Price Index. Usually, the rises are not too large and hopefully, your income will also rise along with general inflation so it shouldn’t affect your budget too much.
While California has the largest economy in the country by far, it sits nicely on the list of property taxes by state. California comes in at around #15 when ranked from lowest to highest, with the highest-ranking states mostly in the Northeast, like New Jersey, currently coming in at a staggering 2.49% compared to around 1% in California. This is good news for California homeowners and another excellent reason to make this state your home, as even a single percentage point on an amount as large as a home value can make a substantial difference.
However, property taxes have a real, tangible benefit to those who pay them, as unlike other taxes, property taxes stay within the county they are collected in. That means that the money you pay ends up in local schools, fixing roads, and going towards other programs that directly benefit you as a citizen of the county. Even though no one likes paying taxes, at least with property taxes you benefit from them directly, and paying them improves the quality of life for you and those around you.
How Does the Process Work?
Typically, the process works as follows:
The county assessor determines who owns what properties
The assessor sets a taxable value that tells the homeowner how much to pay
Legal exemptions and other factors are taken into consideration
The assessor completes a tax roll to show the assessed values
The county auditor or controller calculates the total amount of taxes due
The tax collector sends out the bills and collects the taxes for the first and second half of the fiscal year
If you’re having trouble paying, there are several means for homeowners to see a reduction or get help with their property taxes. The homeowner’s exemption in the California Constitution provides for a $7,000 reduction in taxable value for primary residences, which can save you considerable money, and it’s also worth looking into the following:
Homeowners aged 55+ can apply for a chance to sell their primary residence and transfer the property tax to a new one, but the value of the new home must usually be equal to or less than the value of the old property.
Proposition 13 attempts to protect homeowners from rapid spikes in inflation by setting a limit of 2% increases from year to year in property taxes. However, this only applies to existing homeowners, and when you buy a new property it resets this limitation.
Unfortunately, property taxes are still a major issue for many people. If you’re having trouble with your property taxes, some organizations can help you, and ways to prevent losing your house or dealing with foreclosure. Before penalties or legal issues set in, look into getting help on your property taxes, and you can save yourself time, money, and stress by asking for help before it’s too late!