Proposition 13 & Property Tax Trending by Valerie Faltas
All property tax values in California increase from 0 2% every year this percentage trend is from on the Consumer Price Index that measures inflation. Normally California taxpayers pay about 1. 25% of their assessed value in actual property taxes annually. For example if you purchased your house for $100,000 your base value would be $100,000. Since you pay about 1. 25% of the assessed value your property tax bill the first year would be approximately $1,250. The property tax bill for the first year would be pro rated for the part of the year you owned the home & or you would get credit in escrow for the amount the prior homeowner owed.
In California that base value stays the same unless there is re assessable event the only variation is that it trends no more than two percent every year. So the second year you own the property the increases would max out at a $2,000 increase based on the 2% limit. your assessed value would increase from $100,000 to $102,000 meaning your property taxes would increase from $1,250 the first year to $1,275 the second year. The 2% compounds over time so the amount that it increases also increases over time since the value does compound. There are years where the percentage is less than 2% again that number is based on the Consumer Price Index.
When certain exemptions are applied to your assessed value it will not increase annually for inflation. If a home has a Proposition 8 decline in value temporary decline in value based on market decline the value will not increase. The assessed value is evaluated annually by the Office of the Assessor to decide if it should be adjusted. Similarly if there is Disaster Relief exemption also called Misfortune Calamity applied to a property the assessed value will not trend the Office of the Assessor will visit the house each year to see the property repairs will adjust the value or not based on what has been repaired. In addition exemptions for the disabled & or veterans do not increase either. Normally your base value will increase up to 2% annually unless an exemption that applies.
Usually speaking though most houses in California will trend every year consequently each property owner will have a slight increase in property taxes every year. What happens over a period of about thirty years is your assessed value will more than double. For example my parents purchased their house in 1979 for $80,500 the current assessed value for that residence based on the $80,500 thirty years ago is $138,783 so in thirty years they went from paying $1,006 per year to $1,734 per year. If you start out with a property tax base of $500,000 in thirty years your assessed value will be $887,922 which means you will start off paying $6,250 per year in thirty years be paying $11,099 per year
If you understand how drop your property tax base you will save thousands in the long run If you purchased your residence for $500,000 today your house is only worth $300,000 you will save thousands With a $300,000 tax base you will pay $3,750 per year in 30 years your assessed value will be approximately $532,753 so you will pay about $6,659 per year in property taxes. Don't settle for the temporary reduction in value the Assessor is offering right now called Proposition 8 Decline in Value. So PERMANENTLY lowering your property tax base by $200,000 will save you EVERY year you own your property The California Little Black Book shows you how
About the Author Valerie Faltas Property Tax Expert has been involved in all facets of real estate for over ten years including assessments appraisals estates trusts investing much more. She is Certified Property Tax Appraiser Licensed Residential Appraiser a member of the International Association of Assessment Officers. As a real estate investor advisor she is well versed in all aspects of real estate. to contact Valerie Faltas go to her website propertytaxlittleblackbook. com.
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