California Property Taxes

4/1/19 – Property taxes in California are limited by Proposition 13, a law approved by California voters in 1978. The law has two important features. First, it limits general property taxes (not including those collected for special purposes) to 1% of a property’s market value. And secondly, it restricts increases in assessed value to 2% per year. Those two rules combine to keep California’s overall property taxes below the national average. The average effective property tax rate in California is 0.79%, compared with a national average of 1.19%

How Property Taxes in California Work

California property taxes are based on the purchase price of the property. When you buy a home, the assessed value is equal to the purchase price. From there, the assessed value increases every year by the rate of inflation (change in the California Consumer Price Index), with a cap on increases of 2%.

This means that, for homeowners who have been in their house a long time, assessed value is often lower than market value. The same is true of homeowners in areas that have experienced rapid price growth such as San Francisco and San Jose in recent years.

Homeowners in California can claim a $7,000 exemption on their primary residence. This reduces the assessed value by $7,000, saving you at least $70 per year. You only need to claim this exemption once and it’s important to do so shortly after you buy – the due date is Feb. 15.

California Property Tax Rates

Property taxes are applied to those assessed values. Each county collects a general property tax equal to 1% of assessed value. That general tax is the single largest tax, but there are other smaller taxes that vary by city and district.

Voter-approved taxes for specific projects or purposes are common, as are “Mello-Roos” taxes. Mello-Roos taxes are voted on by property owners and are used to support special districts that finance services, public works or other improvements.

A good rule of thumb for California home buyers who are trying to estimate what their property taxes will be is purchase price x 1.25%. This incorporates the base rate of 1% and additional local taxes, which are usually about 0.25%.

You can go to the LA County Auditor-Controller and see the composition of your tax rate under Property Tax in the main menu.  Under Tax Rate Lookup, you’ll need to know the tax rate area of your home, which can be found by putting in your address here at the LA County Assessor’s website.