What you need to know about property taxes in our real estate market.

I often get asked to clarify a few things about property taxes, so I’ll cover those in detail today.

At the close of escrow, your property taxes are prorated to the time you sold or bought. You only pay for the time you owned the property, but the way taxes are calculated can make this confusing. The tax year runs from July 1 to June 30, but the bill comes in October. You can pay it in two installments, one on November 1 and the other on February 1. 

If you buy a home in May, your next bill will likely reflect the previous owner’s tax amount. At the same time, you will receive a supplemental tax bill for the difference in taxes between what the property was assessed for and your purchase price. You’re only paying for the time you owned it, but the county is playing catch-up for the price appreciation.

“In California, the annual real estate tax is limited to 1% of the assessed value.”

The property’s assessed value cannot increase by more than 2% each year until it is sold. If the original owner purchased the home in 1965, you might have a larger supplemental bill because their assessed value would be low. 

In California, the annual real estate tax is limited to 1% of the assessed value. The tax bill in San Luis Obispo County varies by area, but you’ll see about 1.25% in most places, depending on whether your property is within city limits or not. An unincorporated county like Templeton will have lower property taxes. A $1 million home will have a tax bill of about $12,500 per year. In escrow, you can see how these prices will shake out for your home. 

However, you can make property taxes work in your favor. During the recession, we had lots of people reach out about the true value of their homes. They took that information to the assessor appeals board and contested their assessed value. It worked for many of them. 

If you have more questions about property taxes or any other real estate topic, feel free to call or email me. I look forward to hearing from you.