Property Taxes in California

Tax Professionals Resource
September 5, 2012 — 1,340 views  
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California property taxes are paid in each county of the state. Each county has its own surcharges and collection agency for these taxes. The money from these taxes is the funds used to run the majority of county services. The property taxes are collected by the county and the revenues obtained are shared with the state.
Every property is assigned a value by the county assessor. This value is used to calculate the taxes due each year. Clients are assessed 1% of the value of their property. However, this assessment cannot rise more than inflation in any given year. The assessor is only allowed to increase the value of the property if it is sold or improvements are made that must be filed with the county.

In 1978, because many elderly citizens were being priced out of their homes due to property tax increases, the state passed Proposition 13. The measure set property taxes at a level of 1% of the value of the property and severely limited the ability of counties to raise taxes. A portion of the property tax money was going to the school system. Besides limiting property tax increases, this proposition also had the effect of moving school support from the county to the state in order to keep schools funded near their former level. 

Another issue with Proposition 13 is that citizens who have remained in the same home for years pay much lower rates of taxes than those who have recently bought a home. Although this has been changed by the recent fall in housing prices, younger families often pay two to three times more in property taxes than established families. However, the citizens of the state have not elected to fix this problem...

A homeowner can appeal the assessment of his property and with falling values, many citizens have appealed successfully and lowered their property taxes. With the falling values, foreclosed homes where no taxes are being paid, and the fact that the economic situation has caused many young families to leave California, the state is suffering a reduction of property taxes. California lost over 6% of its property taxes during the first year of the recession and this loss is continuing. For more on this problem, go here to read study on the issue by the Rockefeller Center.

California homeowners can pay their taxes in two installments. One installment is due October 1 and the other is due on February 1. Taxes are considered late if not paid by December 10 or April 10. Penalties are applied at 1.5% per month plus 10% per year behind. Properties that have taxes more than five years delinquent can be sold to pay the taxes regardless of the condition of the loan on the property.

Tax Professionals Resource