10 Frequently Asked Questions About California Real Estate Property Taxes

Real Estate Property TaxesWe only own property inasmuch as we can pay the legal taxes applied to it.  Here are the ten most common questions you should know the answers to if you own property or plan to someday own property.

1.  How is Property Tax Computed in California? Annual property taxes will usually be from 1% to 1.25% of the sales price of the home at purchase.

2.  Can Property Taxes Go Up Annually? Unfortunately, the answer is yes.  In California the maximum tax hike on property is 2% of the previous rate.

3.  When Do I Have to Pay Property Taxes? Property taxes are paid twice a year.  One is billed in February and is due by April 10 at the latest; the other is billed in November and is due at the latest by December 10

4.  What Happens to the Tax I’ve Already Paid this Year if I Sell My House? This is handled in the escrow process at closing.  If you have already paid taxes for time past your occupancy, the buyer will reimburse you for the difference.

5.  What is an Impound Account? If your lender is paying your taxes and insurance as part of your monthly payment to them and your down payment on the house was less than 20%, they will require you to have what’s known as an impound account.

6.  I have an Impound Account – Why Do I Get a Refund Some Years and a Raised Payment in Others in Order to Fund the Impound Account? Your lender is collecting funds from you to pay your taxes and insurance premiums on your behalf.  When your taxes or premiums rise or fall, they adjust the amount collected from you.

7.  Can I Simply Pay All of My Property Taxes in December? Yes, you can – but it may have some tax implications.  Check to see if there are any downsides to this in your county.

8.  What is Mello-Roos? Mello-Roos is a fund set up for builders to borrow from in order to put in the necessary infrastructure for a new development – sewers, sidewalks, street lights, etc.  The loans are paid back through your property taxes.

9.  How Can I Tell if I am Buying a ‘Mello-Roos’ Home? The seller is legally required to inform you.  The tax bill, which is public information, will also list this.

10.  How Long does Mello-Roos Apply to a Property? Typically 10-20 years.

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