Property tax in California is calculated primarily based on the assessed value of the property multiplied by the local tax rate. Here's a detailed breakdown of how the calculation works:
- Assessed Value: The property’s assessed value is determined by the county assessor and is usually based on the property's purchase price or construction cost. Under Proposition 13 (1978), this assessed value is "frozen" at the purchase price and can only increase by a maximum of 2% per year unless there is a change in ownership or new construction.
- Base Tax Rate: The base property tax rate in California is 1% of the assessed value.
- Local Add-Ons: In addition to the base 1%, there are local assessments such as voter-approved bonds, parcel taxes, and fees for local projects. These typically add around 0.1% to 0.35%, making the average effective property tax rate approximately 1.1%.
- Calculation Formula:
Annual Property Tax=Assessed Value×(Base Tax Rate + Local Add-Ons)\text{Annual Property Tax}=\text{Assessed Value}\times \text{(Base Tax Rate + Local Add- Ons)}Annual Property Tax=Assessed Value×(Base Tax Rate + Local Add-Ons)
For example, if you buy a home for $500,000 and your local add-on is 0.15%, your annual property tax would be approximately:
$500,000\times 1.15%=$5,750
- Annual Increase Cap: Each year, the assessed value can increase by no more than 2% unless there is a reassessment triggered by events like a change in ownership or new construction.
- Exemptions and Discounts: Homeowners may qualify for exemptions such as the Homeowners’ Exemption, disabled veteran exemptions, and other discounts that reduce the taxable value. Also, provisions under Proposition 19 allow certain eligible groups (e.g., seniors) to transfer their taxable value or defer taxes.
- Payments: Property taxes are typically paid in two installments, in December and April.
In summary, property tax in California is calculated by multiplying the property’s assessed value by the combined tax rate of about 1.1%, adjusted for any exemptions or local assessments, with an annual capped increase on assessed value of 2% unless a reassessment event occurs.
