Real Estate Tips: What are Property Taxes?

When you buy a home or if you’re already a home owner, you’ll at one point or another have to understand how property taxes work. Unfortunately, similar to income taxes, it is something that everyone who owns a home has to pay. Beware that this can be a very boring topic, but make sure you read up below for answers to all your questions around property taxes.

1. What are property taxes and who has to pay them?

All owners of business, industrial, agricultural and residential properties must pay property taxes unless exempted by state law. Lessees must pay property taxes if they are leasing real estate from an owner whose property is exempt.

3. How much will they cost?

Combined with the 1% base rate, most property tax rates in San Diego County are somewhere between 1.02% and 1.19%. The individual bonds are listed out on your property tax bill. You can also find this information online if you visit The San Diego County Treasurer-Tax Collector's Office.

4. How often do I have to pay them?

This is very important to know as under California law, it is the responsibility of the taxpayer to obtain all tax bills and to make a timely payment twice per year.

5. When are they due?

The first installment of secured property tax is due on November 1 and becomes delinquent after December 10. The second installment is due February 1 and becomes delinquent after April 10. If the delinquent date falls on a weekend or holiday, you have until the close of the next business day to pay your tax bill.

Important Dates to Remember:

August 31 - Unsecured tax deadline, 10% penalty added on September 1
September - Secured property tax bills mailed late in the month
November 1 - First installment of secured property taxes due; delinquent unsecured accounts are charged additional penalties of 1.5% until paid
December 10 - First installment is delinquent after close of business; 10% penalty added to payments made after this date.*
January 1 - Unsecured bills mailed out; lien date for unsecured taxes and current secured taxes
February 1 - Second installment of secured property taxes due 
April 10 - Second installment payment deadline; 10% penalty plus $10 cost added to payments made after this date.*
May - Delinquent notices for any unpaid current taxes mailed
June 30 - End of fiscal year
July 1 - Beginning of the fiscal year; delinquent secured accounts are transferred to the defaulted tax roll and additional penalties added at 1.5% per month on any unpaid tax amounts, plus a $33 redemption fee. These bills are also referred to as prior year secured taxes or defaulted taxes. 
* If a delinquent date falls on a weekend or holiday, the delinquent date is the next business day.

6. What is Proposition 13?

Proposition 13 limits the tax rate to 1% of a property's current assessed value, plus any voter-approved bonds and assessments. The proposition also states that property values cannot increase more than 2% annually, based on the California Consumer Price Index. However, property is reassessed whenever it changes owners or undergoes new construction.

7. Questions to ask your local tax office

  • What is the assessed value of the home?

  • What is the formula used to calculate property taxes?

  • Are there supplemental taxes in the first year of ownership?

  • Do rates go up after the first year?

  • Will the home be reassessed after closing?

  • When was the home last assessed?

  • When is the next scheduled reassessment?

  • Are there exemptions to – or assistance for – property taxes?

  • Will remodeling the home cause a reassessment?

  • Does the home fall under the jurisdiction of multiple tax authorities?

  • How do taxes on the home compare to other properties in the area?

  • Is it possible to appeal the property taxes?

Sources: Balance Pro,