You also have to remember that in CA the assessed value of your home (on which your property tax is based) will never go up more than 2% per year. So while the property tax rate may be higher than some other places, if you stay in your home for more than a few years, the actual amount of property tax you pay will quickly be lower than it would be elsewhere.
That depends on what state you live in. CA property taxes can't go up by more than 2% (or thereabouts - the specifics don't matter) per year, and aren't pegged to the actual current value of your home.
California does not have low property taxes. Tax = rate * assessed_value. assessed_value is huge if you purchased during last 7 years and goes up 2% every year
No, the property tax is not low in CA. What you pay is tax_rate*assesed_value. Because value is high what you actually pay is huge amount of money on what is considered a very modest house in other places
California limits increases in property taxes to 2% for this reason. More generally, property owners vote at a high rate, so governments will usually be less aggressive in increasing property taxes. Of course, they still go up, but it's generally less of a risk.
California homeowners pay property tax on the "assessed value", i.e. of the home. This value generally starts at the purchase price and then goes up with the lower of either inflation or 2%. The tax rate is the same for everyone but will be on different values. The rate is 1%, going to the State of California, and usually additional, but lesser, local taxes.
The base CA property tax rate is 1%, so it can never be lower than that. It's nearly always higher since localities can add assorted fees to it (so of course they do).
You might have a long-time owner paying 0.65% due to prop13 slowing the year-to-year increase, but as a new purchaser your CA property tax will always be >1%.
California homeowners pay property tax and the rate goes up either with inflation or 2%. I'm guessing you think it should go up with the market value of the home. Thank god it doesn't or I would have had to sell instead of being able to give my kids a stable home for the past 18 years.
> It does, because the property value is high right, but in California that rate could be "locked in" by the same owner decades ago (property tax doesn't change here until sold).
Property taxes can change annually, though there is a 1% maximum rate limit, and so can assessed values, though there is an upper bound to assessed value based on a 2% per year increase over the baseline value set by a qualifying sale or improvement.
What's really odd about property taxes in CA is they only go up a fixed amount per year which has not kept up with growing property values in many areas. So, even though property values have dropped significantly revenue has not dropped as much as other states.
In California, property taxes are usually only reassessed on sale. There is also an inflation linked increase, but it's capped at a maximum of 2%. So you can end up with people who have been living in houses for 20 or 30 years who are paying an order of magnitude less in property tax than if they'd just bought the same house today. This also means that if you buy a house in a down market then you're likely to save a lot in terms of property taxes. Disclaimer: I am not a tax adviser etc.
> That can still happen with today's real estate taxes
Not in California. The maximum annual increase in assessed property value is 2%, and property tax is limited to 1% of assessed value. This only changes when the home is sold.
It's pretty unlikely for anyone to be forced out of their homes because of property tax increases.
> And property taxes alone are guaranteed to increase 2%/year in California
No, they aren't. Assuming no increase in property tax rate (which is a good assumption, since your local taxing jurisdiction almost certainly already charges the maximum nominal rate of 1% allowed under Prop. 13), your property taxes will increase only by the amount your assessed value for taxation increases, which is capped to the lower of 2% or the actual annual (trailing) rate of inflation.
For 2021/2022 the actual cap is 1.036%, based on the actual California CPI for October 2019 through October 2020.
This is why California's property tax system, in which taxes don't increase until a property is sold, is often cited as a major factor in its housing dilemma.
California caps how much property tax can increase each year unless there is a change in ownership. My mom pays $4k/yr in property tax for the house I grew up in, which is currently worth $2M.
Not in California it can't. Property taxes can rise a maximum of 2% per year for as long as you own a property. That's rarely enough to even keep up with inflation.
reply