How Do Property Taxes Work in California?
By Eli Fletcher, The Fletcher Real Estate Team
"The only two certainties in life are death and taxes." – Benjamin Franklin. And if you own property in California, you know just how true that is! But here’s the surprising part: despite California’s reputation for high costs, our property tax rates are actually lower than the national average. Let’s dive into how it all works, so you’re never caught off guard.
Understanding Property Taxes in California
What Are Property Taxes?
In simple terms, property taxes are fees homeowners pay based on the value of their real estate. These taxes help fund schools, emergency services, public infrastructure, and more. Every county in California collects property taxes, making them essential to the state’s economy.
How Are Property Taxes Calculated?
Your property tax bill in California is based on Proposition 13, a law passed in 1978 to stabilize rising taxes. Here’s the breakdown:
Base Tax Rate – 1% of your property’s assessed value.
Annual Increase Cap – Assessed values can’t increase by more than 2% per year (unless you remodel or sell the home).
Reassessment Triggers – If you buy, transfer, or significantly upgrade a property, the county reassesses its value at market rate.
Example Property Tax C alculation
Let’s say you buy a home for $600,000. Your property tax bill starts at $6,000 per year (1% of the purchase price). The county can only increase this assessed value by 2% annually, keeping tax hikes manageable. If the market value skyrockets, your taxes won't—unless you sell or make major improvements!
California Property Tax Payment Schedule
When Are Property Taxes Due?
Property taxes in California aren’t a one-time deal. You pay them in two installments:
First installment: Due November 1, delinquent after December 10.
Second installment: Due February 1, delinquent after April 10.
Miss these deadlines? A 10% penalty gets added to your bill. To help remember, use this trick: “No Darn Fooling Around”—November, December, February, April. If you pay your property taxes through your mortgage, your lender ensures payments stay on schedule.
Where Do Your Property Taxes Go?
Ever wonder what your taxes actually fund? Here’s where your money goes:
Public Schools – Schools get a significant portion of property tax revenue, which is why Bay Area real estate prices often correlate with top-rated schools.
Emergency Services – Police, firefighters, and EMTs rely on property tax funding.
Infrastructure – Road maintenance, water systems, parks, and public projects.
Local Government – Pays municipal employees and funds city services.
Counties largely control how these funds are distributed. Some rely solely on property taxes for revenue, while others receive state funding.
Buying or Selling? What You Need to Know
Property Taxes & Home Purchases
If you buy a home mid-year, property taxes are typically prorated between buyer and seller. This ensures each party only pays taxes for the time they owned the property that year. Want to confirm your share? Check your mortgage interest statement or ask your favorite realtor for guidance.
What Happens If You Don’t Pay?
Ignoring your property tax bill is a costly mistake. Late payments rack up penalties, and after five years, the county can seize and auction your property. Not a risk worth taking!
Property Taxes vs. Real Estate Taxes – What’s the Difference?
There isn’t one! These terms are used interchangeably, so don’t let the wording confuse you. Whether you call it real estate tax or property tax, it’s the same bill due every year.
Final Thoughts on California Property Taxes
Property taxes keep our communities running, and thanks to Proposition 13, they remain predictable. Whether you're buying, selling, or investing, understanding property taxes helps you make informed decisions.
Here is a link to a property tax calculator
Want personalized advice from the best real estate agents in your area? The Fletcher Real Estate Team is always here to help!
