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Property Taxes
When You Purchase
When you purchase a home, the county tax assessor reassesses the property and sets a new property tax amount based on your purchase price. Your property taxes will be approximately 1% of your purchase price, plus any voter approved bonded indebtedness of the community. (A common one here is the "Mello Roos" assessment which is added to the property taxes for every home located within the Mt. Diablo School District. This is an additional $67 per year which is added to your tax bill. Another common item is for "pest abatement" and may be about $4 per year. Or a bond for a sewer district which can be $200 per year.)
Thereafter
In future years, the tax assessor is allowed to increase the accessed value by 2% appreciation per year.
Homeowner's Exemption
This is a deduction of $7,000 from the "accessed value" and applies only to owner-occupied properties. Once you've purchased a home you will received a card to fill out to apply for the exemption. The card must be completed and returned between March 1st and April 15th. Applications submitted after April 15th, but before the end of the year will qualify for only 80% of the exemption.
Supplemental Tax Bill
Boy does this one cause problems. Yes, the tax assessor reassesses the property when it is sold, but they don't always get the new tax bill amount "into the system" as it were and the first tax bill that many buyers receive is one which reflects the rate for the previous owner. So you get this bill, think "wow" the taxes aren't as high as I though, pay the bill, send it off and think you are done. Nope. Expect that you will get another tax bill, this one called the Supplemental Tax Bill. It will cover the difference between the old rate (which you already paid) and the new rate (which you really owe).
EXAMPLE: $250,000 purchase price
YEAR 1
$250,000 less $7,000 Exemption = $243,000
$243,000 x 1% = $2,430 tax bill (plus any special bond assessments)
YEAR 2
$250,000 plus 2% appreciation = $255,000
$255,000 less $7,000 Exemption = $248,000
$248,000 x 1% = $2,480 tax bill (plus any special bond assessments)
YEAR 3
assume you add on a new bathroom valued at $15,000
$255,000 plus 2% appreciation = $260,100
$260,100 plus $15,000 addition = $275,100
$275,100 less $7,000 homeowners exemption = $268,100
$268,100 x 1% = $2,681 tax bill (plus any special bond assessments)
YEAR 4
$275,100 plus 2% appreciation = $280,602
$280,602 less $7,000 homeowners exemption = $273,602
$273,602 x 1% = $2,736 tax bill (plus any special bond assessments)
If you now sold your house for $300,000, the property tax bill for the new owner would be based on the $300,000 purchase price.
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