California Property Tax

Calculating Property Taxes in California

Property tax calculation: California’s property tax system relies on Proposition 13. Passed in 1978, this law significantly limits the tax liability of California property owners to the assessed value at the time of ownership change. Proposition 13 also establishes a base property tax rate of 1%.

A property owner’s precise tax liability is determined annually by assessors certified by the Board of Equalization. Although regional tax rates (also known as mill rates) vary slightly by location, California property owners typically multiply their property’s value by 1.25% to estimate their tax rate.

New and recent laws: Passed in 2023, rules 462.540 and 462.520 altered the tax assessment basis for disabled individuals, elderly persons, and wildfire victims. If someone from one of these groups changes their primary residence, the tax liability of the new residence will be based on that of the original residence.

National comparison: California’s average property tax rate is 0.71%, lower than the national average of 0.90%.

County/Municipality-Specific Rates

Los Angeles County: The median property tax rate in Los Angeles County is approximately 1.24%, and the average rate is around 0.77%.

San Diego County: The median tax rate in San Diego County is about 1.22%, while the average rate is roughly 0.72%.

Orange County: The median tax rate in Orange County is near 1.14%, and the average property tax rate is approximately 0.67%.

San Bernardino County: The median tax rate in San Bernardino County is around 1.32%, with an average property tax rate of about 0.72%.

Riverside County: The median tax rate in Riverside County is close to 1.26%, and the average property tax rate is approximately 0.86%.

Reassessments and Increases

Reassessment frequency: In California, homes undergo reassessment upon completion of new construction or when ownership changes. Furthermore, additional reassessments occur annually.

Renovations and improvements: While minor, cosmetic home improvements typically do not trigger a reassessment, any new construction, such as adding a garage or an accessory dwelling unit, will lead to a property reassessment.

Reassessment impact: Tax reassessments can affect rental accounting by potentially increasing a property owner’s tax liability. As a result, this can ultimately decrease the income generated from a landlord’s rental property.

Reducing Taxes and Exemptions

Though paying property taxes in California can be stressful and costly, landlords have options to reduce their tax burden. We’ll explore some of these methods here.

Appeals: Property owners who believe their property tax burden is unfair can appeal an assessor’s decision. To do so, the property owner must file an appeal and appear before the county appeals board to present their case. The deadlines for filing an appeal vary by county and year. Reference the California Board of Equalization website for more information.

Additionally, certain individuals can qualify for a property tax exemption. These include the following:

Homeowner: Homeowners in California may claim a $7,000 property tax exemption on a primary residence. The home must have been the owner’s primary residence as of January 1.

Senior citizen: Persons at least 65 years old who meet specific income requirements may apply for a California senior citizen property tax exemption, which could significantly lower their property tax liability.

Disabled veteran: Disabled veterans with a service-related injury or disease, or the surviving spouse of a deceased disabled veteran, qualify for a $100,000 exemption on their primary residence. This exemption also increases annually with inflation.

Gold Star spouse: California does not offer exemptions specifically for Gold Star spouses.

Organization-specific: Under federal law, religious and charitable organizations, such as nonprofits and schools, are exempt from paying property taxes.

Property Tax Deductions

Tax deductions: Landlords can deduct property tax payments from their rental income. While this won’t change the amount of the tax itself, it can lower the landlord’s overall liability. Landlords can combine property tax deductions with other rental-specific tax deductions to reduce the tax owed in other areas, providing a significant benefit for property owners.

Forms: Landlords can claim deductions by itemizing them in Schedule A of Form 1040.

How Often You Pay Taxes

Payment frequency: California landlords must pay property taxes twice a year. However, they are allowed to make both payments at once or in two separate installments.

Due dates: The first installment is due on November 1, and the second is due on February 1.

Late payments: In California, failing to pay property taxes on time results in fees for property owners. If five years pass and the property owner’s taxes remain unpaid, the property may be subject to a tax sale.

How to pay: California property taxes can be paid in person, via mail, or online using an eCheck or a credit or debit card.

What do property taxes pay for in California?

Though paying California property taxes can be a demanding process, these funds contribute to improving local communities around your home or rental property. Here are a few ways the California government allocates property tax dollars:

Education: Property taxes help fund teachers’ salaries and cover essential school maintenance and other educational resources.

Public safety: Taxes also help pay the salaries of emergency medical service workers and vital public safety officers in the police and fire departments.

Infrastructure: The revenue generated helps to maintain and construct publicly used structures like roads and bridges, public transportation systems, and water and sewage networks.

Resources and Contacts

• California landlord-tenant laws
• California Association of Housing Authorities
• LawHelpCA.org
• Eviction courts vary by county. Reach out to your nearest Superior Court of California for assistance.