Important Property Tax Information for You

Here’s a boring real estate topic that you probably need to know a lot about (especially if you’re a homebuyer): property taxes. This is something I’m asked about all the time so I wanted to clear a few things up today. The first thing you should know is that the current property taxes on a home you’re interested in buying are not relevant. If you’re from out-of-state, perhaps your property taxes don’t necessarily change when the property is sold. Here in San Diego, things are completely different. Property taxes are reset each time a property is sold and based on the sale price.

If you make an addition to your home, the county can increase your taxes accordingly.

Under Proposition 13, which was passed in the 1970s, property taxes shall be 1% of the sale price plus a few additional items, like street lights, vector (mosquito) control, and other bond measures that were included in the original bill. In round numbers, you can budget for about 1.2% of your purchase price for property taxes.

Here’s a neat way to figure out your monthly payment. A $500,000 home is going to be $500 a month in property taxes. A $5 million home will have a $5,000 monthly bill in property taxes. Under Prop 13, your property taxes can go up by as much as 2% per year.

There is an exception to know about, however. If you do an improvement to your home, the county can add on to your assessment and increase your taxes accordingly based on the value your addition added to your home.

If you have any questions for me or you’re thinking of buying or selling a home, don’t hesitate to give us a call or send us an email. We look forward to hearing from you soon.