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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.

Every property tax base in California increases from 0-2% every year, this percentage trend is based on the Consumer Price Index which measures inflation. Usually, most Californians pay about 1.25% of their assessed value in actual property taxes per year. So if you acquired your residence for $100,000, and it was market value, your base value would be $100,000. Because you would pay 1.25% of the assessed value, your tax bill the first year would be about $1,250. Your property tax bill for the first year would be pro-rated for the part of the year you owned the residence and/or you would get credit in escrow for the amount the prior homeowner owed.

Before I get into this topic let me define PUD: PUD stands for Planned Unit Development. A PUD is basically a single family residence and the legal ownership of the home is legally defined that way. The biggest difference is that a PUD is part of a neighborhood, part of a larger development similar to a condo complex. You will own your home and still pay an association fee per month to maintain community areas such as parks, pools and sometimes recreation rooms. The association regulates neighborhood improvements so if you want to make major changes to your home or want to paint your house you will need the homeowners’ association’s approval. Since a PUD is basically a single family home that is also part of a larger neighborhood you are liable for your own repairs and maintaining your own homeowners insurance since you own the land and the structure.