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Assessments (property taxes) are the highest expense after debt service (mortgage) for taxpayers and knowing property taxes and assessments can only benefit you as a homeowner. The average homeowners who bought a home in the past six years pays at least $7,000 per year in property taxes which equates to almost $600 monthly. After ten years the amount of property taxes paid cumulatively will be more than $70,000! If that homeowner can lower their property taxes by just $2,000 per year over the next ten years, you will save $20,000! Being a knowledgeable homeowners about the three aspects of property taxes, appraisal, assessment and government process, enables you to save thousands in the long run.

All property tax values in California trend from 0-2% every year, this percentage increase is from on the Consumer Price Index that gauges inflation. Usually, California taxpayers pay about 1.25% of their assessed value in actual property taxes annually. For example, if you bought your property for $100,000, your base value would be $100,000. Because you pay about 1.25% of the assessed value, your property tax bill the first year would be approximately $1,250. The property tax bill for the first year will be pro-rated for the part of the year you owned the house and/or you would get credit in escrow for the amount the prior owner owed.

Prop 13 does apply today to all property owners in California. Current California Property Tax Law was enacted in 1978 to control the amount of property taxes paid by taxpayers. Prior to Current California Property Tax Law there was no limit on property taxes. The assessed value was based on the changing market value every year and because the market values increased significantly over time in California, the amount of property taxes increased significantly. As the values of the homes increased over time, older folks were being driven out of their homes unable to pay the property tax increases.

In California, there are essentially two triggers for re-assessment: transfer in ownership and construction. A change in ownership occurs when a deed or deeds are filed at the county Recorder’s Office, the Recorder will forward the deeds to the Office of the Assessor for assessment reasons. The Office of the Assessor will then evaluate the change in ownership to see if it is re-assessable. If it isn’tre-assessable then the process stops there, however if it is an assessable transfer it is forwarded to the appropriate staff to give or review a market value and adjust the base value accordingly. A change in ownership that would not be assessable would need to fall within one of the various exemptions allowed by the State such as a transfer into a revocable trust or an inter-spousal transfer which are all articulated in our Inherited Property and Exemptions Guide which is part of the California Little Black Book.

I applied with the Los Angeles County Assessor’s Office early 2003, I was one of 900 applicants for 25 positions as a Real Estate Appraiser Trainee. I was one of the 25 chosen for the class they hired that year. As a trainee I went through an 18 month probation period and a 12 month training with them including classroom training, many exams, field training in all aspects of real estate appraisal, property tax law and the processes within the Assessor’s Office. If had I failed any one of my series of exams or gotten a bad performance review I would have been kicked out of the program.