If you are a homeowner or looking to buy a property in California, you must understand property tax laws in the state. Property tax laws in California can be complicated, and getting caught up in them can come with unintended penalties. However, understanding what property tax laws in California entail can keep you in good standing with local tax authorities, and help you plan your finances accordingly.
What is property tax?
Property tax is a tax on real estate levied by government authorities. In California, property tax laws are explicit, with the tax rate capped at 1% of the property’s assessed value. However, there are additional taxes that may apply to specific types of properties, such as those with bonds, and levies.
How is property tax assessed in California?
In California, property taxes are usually assessed by the county where the property is located. The assessor’s office determines the market value of your property based on its location, type, size, age, and condition. The assessed value of your property, which is used to calculate your property tax amount, is calculated by taking the market value and subtracting any applicable exemptions.
How do property tax exemptions work in California?
There are two primary types of exemptions available to homeowners in California – the Homeowner’s Exemption and the Disabled Veteran’s Exemption. The Homeowner’s Exemption offers a reduction of $7,000 from the assessed value of your property, while the Disabled Veteran’s Exemption offers a reduction of $100,000 for qualifying disabled veterans who own a principal place of residence in California.
What happens if I don’t pay my property taxes in California?
If you fail to pay your property taxes in California, penalties and interest may apply. The penalties can be as high as 10% of the unpaid balance, plus up to 18% interest per year. If you continue to not pay your property taxes, the county may add fees and even issue a lien on your property. In extreme cases, property that is delinquent on property taxes may be sold at public auction.
Property taxes are an essential part of homeownership in California. Understanding how they work, how they are assessed, and any applicable exemptions is critical to staying in good standing with local tax authorities. As a potential homeowner, make sure you understand not only the nuances of property tax laws in California but also how they may impact your current or future property holdings. Working with a qualified tax attorney or accountant may help you stay ahead of any issues or questions that may arise.