Vicki Lloyd
e-PRO, Realtor®
949/457-0281

Property Taxes in California were set at 1% of the home value by Proposition 13 that was passed in 1978. (See History of Taxation) Each time a home sells, it will be re-assessed at the sale price, and the value may only be increased 2% per year until you sell that home.  As a buyer, you should expect to receive a "Supplemental Tax Bill" about 3 to 4 months after closing. This will make up the difference of the new value from the close of escrow to the end of the tax period (December 31, or June 30).

Proposition 8 allows (or requires?) the tax assessor to reduce your property taxes temporarily if the value of your home decreases.  This is only temporary, and when the values return, your tax could be increased back to the level where it was prior to the reduction, and then 2% added to that. This is the only time that taxes could increase more than 2% in any given year.  (See the Tax Assessor's website to a more detailed explaination.)

In some areas, where there are newer homes (generally built after 1988) there may be extra taxes, known as "Mello-Roos" taxes, or "CFDs" (Community Facilities Districts).  These additional taxes are to pay for the new infrastructure, such as roads, schools, libraries, fire departments, parks, etc, that the new community will need. These fees are not based on your property value, but are set when the house is first sold.  They may increase over time, but generally stay very close to the original annual fee.  (See "Understanding Mello-Roos")

To verify the actual tax rate on a property that you are considering, go to the Orange County Tax Collector's Website and look at the actual tax bill.  (You have to enter the property address, then click on the parcel number, then click on the parcel number on the next screen, then scroll down to where it says "click here for details" to get the detailed breakdown.)  Here is a sample of what the detailed tax bill should look like:

For "Seniors" only : Take advantage of special property tax laws written just for you!  If you have lived in your current home for a long time, and have a low property tax value, you may be able to keep that low tax rate after you move!  (This can only be done one time, so make sure that you do it right!) 

If you sell a home in Orange County, and buy another one that is also in Orange County, Proposition 60 allows you to move your current tax basis to the new home IF:

• You are over age 55 at the time you sell the original house
• You buy the replacement house within 2 years (before or after selling the original one.)
• The buyer of your original house does not use this exemption on that purchase.
• The sale price of the replacement home must be equal or less than the sale price of the original home.  (Certain exceptions may apply - see the details at the tax collector's website.)

If you sell a home in Orange County, and buy another one in another county, Proposition 90 may allow you to transfer your tax basis. You will need to contact the county assessor in the new county to verify that they participate in that program.  At this time, the neighboring counties of San Diego and Los Angeles participate, but Riverside and San Bernardino do not.