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  • Writer's pictureMonica Davis

Ultimate Guide To California Property Taxes

Last year, economists made the striking prediction that California’s economy will soon surpass Germany’s based on GDP, making it the fourth-largest economy in the world. California is an economic powerhouse with a massive population, lots of excellent jobs, and a real-estate market that just doesn’t quit. All these reasons and more lead over 100,000 people each year to move and make California their new home.

Despite its extraordinary, unprecedented economic success, California property taxes remain relatively low compared to other states, coming in at around the 16th lowest spot. This is another excellent reason to consider moving to California, but it’s still important to understand all the basic facts about property tax in this state. Making sure that you understand everything and follow all procedures correctly will ensure that you don’t run into any fines or financial and legal liabilities.

Property Tax Basics

To sum it up as simply as possible, California property taxes are calculated at about 1% of a property’s assessed value, which is paid over two payments per year. This money goes directly into the coffers of the county you live in, which pays for local schools, roads, and other improvements that benefit you on a daily basis.

Failing to pay your property tax or falling late on payments can have serious consequences, like a lien or foreclosure being placed on the property, leading to you losing your home, business, or financial stability. To make sure this doesn’t happen to you, let’s look at what you need to know about when to pay property taxes.

When Are Property Taxes Due?

In California, property taxes are due twice per year, once in the Spring and once in the Fall. The first half of the fiscal year in California is typically from January 1st to June 30th, and the second half is from July 1st to December 31st. For the first half of the year, property taxes are due by March 1st and will be counted as late after April 10th, and the second half is due by November 1st and counted late after December 10th.

Running late can lead to penalties of around 10% in California, so it’s important to avoid this. If you continue running late, penalties will increase in severity and can even lead to you losing the property over time. If you are truly unable to pay them, you will have to look into other options like taking out a property tax loan.

The best way to avoid falling late or ending up being unable to pay these taxes is to divide the total amount you will owe per year by 12 and set aside that amount per month. Typically, you can determine this figure by multiplying the property’s purchase price by 1.25%, which will cover the property tax as well as any additional local taxes.

How Are Property Taxes Calculated?

Typically, a county assessor will evaluate the properties and determine who owns what properties. Then, they will calculate the taxable value of the property, which is based on appraisals and other factors like the sales price.

If you don’t feel like the property was appraised or evaluated fairly, there are ways to appeal the process and get a third-party opinion. Exemptions or other considerations are then taken into account, like the benefits to homeowners found in Propositions 60 and 13.

After this process, the county tax assessor will produce a tax roll, which is a document containing all the properties in the tax jurisdiction and their assessed values. The taxes are calculated by the county auditor or controller, and tax bills are mailed out. This is just a simplified overview, but covers the basics of the process.

Now, like most other economic commodities, property taxes tend to go up over time. This increase is tied to inflation in the state, measured by the California Consumer Price Index, with a limit of 2% per year.

What to Do if You Are Struggling With Property Taxes

With inflation and the cost of living on the rise, many people find themselves struggling to pay their property taxes. If you find yourself in this situation, the worst thing you can do is ignore the problem and hope that it goes away. This will lead to exponential fines and penalties, along with more severe legal liabilities that can seriously impact your life.

If you are in this situation, the smartest thing you can do is take out a property tax loan. This will allow you to keep your home, business, and means to earn an income and will get the government off of your back.

Property taxes are just a fact of life. Don’t fall behind, and always try to set money aside for them. If you are behind, there are many ways to get help, so don’t let yourself get too deep in a hole without researching ways to mitigate the issue.

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