How is Property Tax Calculated in California

Property taxes play a significant role in homeownership, and understanding how they are calculated is crucial for both potential and existing homeowners.

California, known for its desirable properties, has property tax rates that are below the national average.

In this comprehensive guide, we will delve into the intricacies of property tax calculation in California, providing you with the knowledge you need to navigate this important aspect of homeownership.

Understanding Property Tax

Property tax is a tax imposed on properties owned by individuals or entities. It serves as a source of revenue for local governments to fund essential services such as schools, police departments, fire departments, and infrastructure development.

Property tax rates vary based on the value and location of the property.

The Calculation Process

To calculate property tax in California, you need to multiply the local tax rate by the market value of the property.

The tax rate is determined by the local taxing authorities and is recalculated on an annual basis. The market value of the property is assessed by the authorities periodically, usually every 1-5 years.

Property Tax = Tax Rate x Current Value of Property

The Tax Rate

The tax rate varies by location and is typically expressed as a percentage or in mills. In California, the overall property tax rate is 0.77%, which is lower than the national average of 1.08%. However, specific cities within California may have slightly different rates. For example:

  • Los Angeles County: 0.755%
  • San Diego County: 0.757%
  • Orange County: 0.684%
  • Sacramento County: 0.839%
  • San Francisco County: 0.649%

It’s important to stay updated on the tax rates in your county, as they may change over time.

Also Read:  Can We Claim HRA and Home Loan Together for Tax Benefit?

The Property Value

Local taxing authorities assess the value of each property within their jurisdiction. They determine the market value based on factors such as location, size, amenities, and recent property sales. This assessed value is used to calculate the property tax owed by the owner.

Proposition 13: A Key Factor in Property Tax Calculation

One of the most notable factors influencing property tax calculation in California is Proposition 13. This tax amendment, established in 1978, was a response to rapidly rising home values that were becoming unaffordable for homeowners.

Under Proposition 13, property assessments cannot exceed a 2% increase of the previous year. This protects homeowners from sudden spikes in property tax due to market fluctuations.

However, it’s important to note that when a property is sold, the new owner will pay the 1% general state rate on the entire property value, resetting the limitations imposed by Proposition 13.

Additional Factors Affecting Property Tax

While Proposition 13 is a significant factor, there are other considerations that can impact property tax calculation in California. These include:

Homestead Exemption

A homestead refers to a homeowner’s primary residence. Homestead exemption provides tax breaks on property taxes for primary residences.

The specific benefits and application of homestead exemptions vary by state, so it’s important to understand the laws in your particular state.

Supplemental Property Tax Bills

When purchasing a new home, you may receive a supplemental tax bill. This bill aims to reconcile any discrepancies between the previous tax rates and the new tax rate based on the most recent assessment.

It’s essential to factor in supplemental tax bills when budgeting for your property taxes.

Also Read:  How to Minimize Capital Gains Tax on the Sale of Your Home

Propositions 60 and 90

Propositions 60 and 90 offer certain property tax benefits for homeowners aged 55 and older. Under Proposition 60, homeowners have a one-time chance to sell their primary residence and transfer its property tax assessment to a new one.

Proposition 90 allows for the transfer of property values from one county to another, but currently, only eight counties participate in this program.

Paying Your Property Taxes

Property taxes in California are typically paid in two biannual installments, based on a fiscal year calendar. The first half of the fiscal year runs from July 1 to December 31, with payment due by November 1 (delinquent after December 10).

The second half runs from January 1 to June 30, with payment due by March 1 (delinquent after April 10).

Late payments result in a 10% penalty, so it’s crucial to ensure timely payment. To avoid late penalties, you can consider budgeting for property taxes throughout the year or choosing to pay through an escrow account.

Impound Accounts

Many homeowners choose to use impound accounts to ensure timely payment of property taxes. With an impound account, a portion of your monthly mortgage payment is set aside to cover property taxes and other related expenses.

This way, you don’t have to worry about making lump-sum payments when taxes are due.

Impound accounts are optional for conventional loans with a down payment of more than 10%. However, government loans such as FHA, VA, and USDA loans, as well as conventional loans with less than 10% down payment, often require impound accounts.


Understanding how property taxes are calculated in California is essential for homeownership. By familiarizing yourself with the tax rate, property value assessment, Proposition 13, and other relevant factors, you can effectively budget for property taxes and ensure timely payment.

Also Read:  Should You Choose to be an Employee or Independent Consultant from a Taxation Perspective?

Whether you choose to pay directly or through an impound account, staying informed and proactive will help you navigate the complexities of property tax calculation in California.

Remember, if you have any specific questions or need assistance regarding property taxes, it’s always advisable to consult professionals in the field.

They can provide personalized guidance based on your unique circumstances and ensure that you make informed decisions regarding your property tax obligations.

Leave a Comment