If you've recently purchased a home in California, you may wonder why your property taxes are so high and whether there's anything you can do to lower your property tax bills.
California property taxes are based on home market values. Values are reassessed each time a property changes ownership or specific improvements are made. Proposition 13 limits how much your property value can increase yearly and caps general property taxes to a percentage of your home's value. These rules help keep tax rates low if you own your home in California for an extended period.
However, these rules can be confusing if you're buying, inheriting, or transferring property. You might not understand how property taxes in California work or how to take advantage of potential savings.
Understanding California property tax exemptions, reassessments, and appeals is crucial for reducing your property tax burden. Our article will explain everything you need to know about California property taxes!
The Basics of California Property Tax
The California property tax structure is based on the purchase price of your home, which serves as the assessed property value for tax purposes. Property values usually increase annually, but California's state constitution limits how much property values can increase each year for existing homeowners. This is good news for long-time residents of the Golden State, but it unfairly penalizes new buyers, as properties are only reassessed when they change ownership or undergo improvements.
Property valuation notices for California property taxes are mailed out between July 1 and August 1. If you've recently purchased a new home or made improvements, you will receive an additional supplemental valuation notice at that time.
If you believe your property has been unfairly assessed, you have the right to appeal the valuation. At Ownwell, we can help you save on property taxes by appealing the assessment.
How Property Tax Rates Are Determined
California property tax rates are calculated using your area's effective property tax rate.
Counties collect a general property tax equal to 1% of assessed property value. Your bill likely includes city and local district property taxes and Mello-Roos voter-approved taxes, which fund public works, services, schools, and infrastructure.
Together, these county, city, and Mello-Roos taxes make up the effective property tax rate.
How much are property taxes in California? Multiply your home's assessed value or purchase price by the effective tax rate for your neighborhood to calculate tax liability.
Example: Assuming a 1% base tax rate, plus 0.21% for additional local taxes, property taxes on an $800,000 house in California with a 1.21% property tax rate are $8,960 annually.
You can also use our California property tax calculator.
Proposition 13 & Base Year Value
Proposition 13 limits property tax increases by:
Limiting general property taxes to 1% of property market value, plus any special, voter-approved taxes.
Restricting annual increases to assessed property value to no more than 2% per year.
Establishing a base year value, which is the market value of a property in 1975 or as established when the property changes ownership or is modified.
Proposition 13 was written to give California homeowners a break from high property tax increases and keep the state's tax rate below the national average. In that regard, it has been a success. The current median California property tax rate is 1.21%, slightly higher than the average national property tax rate of 1.02%.
Long-time California homeowners benefit from Proposition 13, especially when it comes to the base year value. Homes purchased many years ago typically have property valuations lower than their current market value since the most their tax liability increased in any given year of ownership was 2%.
Property Transfers & Proposition 19
Approved in 2020, California state constitutional amendment Proposition 19 allows qualifying California residents to transfer long-established tax base values under these circumstances:
Homeowners buying or rebuilding a new home due to a wildfire or other
Children or grandchildren inheriting a primary residence from parents or grandparents.
California residents over age 55 or those severely and permanently disabled.
Prop 19 can save you money on California property taxes by keeping the base year value the same. For example, if your home is destroyed in a wildfire and you rebuild or buy a new home, this would not trigger a reassessment to increase your assessed property value.
When and Why Property Values Are Reassessed
Property tax trends in California show that similar properties can have drastically different values depending on when they were purchased. This is especially true in areas such as San Francisco and San Jose, which have experienced rapid population growth and real estate market increases.
As new residents move to these areas, their property values are assessed based on higher current market values.
Reassessment Triggers
In California, a property's value is reassessed when it's sold or transferred, resulting in higher tax liability for the new owners. You may see an increase in property tax liability if you do something that triggers a property reassessment, such as:
Purchase or transfer property ownership from an unrelated party
Purchase or transfer a non-primary residence (such as a vacation home) between friends and family
Implement improvements that increase property square footage
Conduct value-added upgrades like extensive kitchen or bath remodels
County Variations in Property Tax Rates
Tax rates vary from county to county in California, based on the property tax revenue required to meet the budgetary needs of each area. Counties with low median home values may indicate areas where residents have lived for a long time without triggering property reassessment. Higher median home values may indicate rising property valuations in an area, possibly due to people moving in and out of the county, or new residential construction.
County | Median Home Value | Medan Tax Liability | Tax Rate |
|---|---|---|---|
$508,791 | $7,523 | 1.45% | |
$485,124 | $6,706 | 1.36% | |
$434,238 | $5,343 | 1.24% | |
$514,928 | $5,879 | 1.14% | |
$315,351 | $3,715 | 1.19% | |
$273,138 | $3,260 | 1.20% | |
$454,653 | $5,506 | 1.21% | |
$720,071 | $8,744 | 1.23% | |
$685,382 | $8,692 | 1.26% | |
$420,000 | $4,701 | 1.09% | |
$683,381 | $8,895 | 1.31% | |
$444,836 | $5,028 | 1.15% |
Property Tax Exemptions & Reductions
If you're struggling with paying your property tax bill, there are steps you can take to reduce your California tax liability. Ownwell can help you apply for exemptions for that year and retroactively for up to two years across all U.S. states.
Homeowners' Exemption
California offers an annual homeowners' exemption to qualifying residents using a California property as their primary residence. You must reside at the property by January 1 of the fiscal tax year beginning in July. You only need to claim the homeowners' exemption once unless you purchase or transfer property ownership. File an exemption claim with your local county assessor by February 15 to receive the full exemption, or between February 16 and December 10 of the tax year for 80% of the exemption.
Filing for this exemption can reduce the assessed value of your property by $7,000, lower your tax liability, and save you money.
Example: A $700,000 property with a $7,000 exemption would be assessed at a value of $693,000 x 1.21%, resulting in a tax bill of $8595.30, a $84.70 savings.
Senior, Disabled & Veterans' Exemptions
If you're a California homeowner over 55 or have a severe and permanent disability, you can transfer a lower assessed property value to a newly purchased or constructed home. Proposition 19 made these property transfers easier by relaxing rules around property value and location. If you qualify, you can now transfer the taxable value of your existing primary residence to another property of any value anywhere in California.
Proposition 19 Changes
You're typically responsible for paying property taxes even if your home is damaged or destroyed. However, if your home was affected by the January 2025 California wildfires, you may be eligible for property tax relief.
Due to recent changes in Proposition 19, you can request a property reassessment if you suffered more than $10,000 in damages or the property lost at least 20% of its fair market value.
Proposition 19 also now allows you to keep the lower tax base value on inherited or purchased property in certain circumstances. If you are a victim of a natural disaster, you can buy a replacement home of greater value than your lost residence and transfer your base tax with adjustments to account for the value difference.
The amendment allows a child or grandchild to retain a lower property tax base if the original owners used the property as their primary residence. However, the inheriting party must make the property their primary residence within one year of ownership transfer to qualify.
Strategies To Manage & Minimize Property Taxes
Successful property tax management can help you save a lot of money over the life of your home. If your property taxes seem too high, you can use strategies to minimize them legally:
Challenge an unfair property valuation to reduce property taxes
Apply for all qualifying exemptions, like the homeowners' exemption
Understand how tax deductions can reduce tax liability
California tax deductions allow you to save money by reducing the amount of your taxable income. The federal government has imposed a cap on deductions for state and local property taxes (SALT). If you itemize deductions, you can deduct up to $10,000, or $5,000 each if you're married and filing separately.
However, if you take the standard deduction, you can't claim property tax deductions beyond that amount. Consult a tax professional to determine whether the standard or itemized deductions are best for your financial situation.
Paying Property Taxes & Avoiding Penalties
So, when are property taxes due in California? You must make your first installment on all real property taxes by December 10 of the tax year to avoid paying fines and penalties.
If you're looking to appeal your property taxes, the deadline is usually either September 15 or December 1, depending on your county.
Save on Property Taxes via Ownwell
At Ownwell, we specialize in helping you save money via property tax appeals, filing for exemptions, and handling retroactive property tax filings. We handle the hassle so you don't have to.
Sign up with Ownwell today and see how you can save on your California property taxes.
