Understanding Property Taxes

Property Tax Basics:

Property taxes can be a huge expense for a homeowner. It is important to understand how much they will affect your monthly and/or annual costs and how they work.

Property tax bill has two payment stubs

• 1st installment payment is due Nov 1st

• 2nd installment payment is due Feb 1st

Some homeowners might be eligible for certain tax exemptions (meaning they could receive a reduction on their assessed value therefore resulting in a lower tax payment). Some of these exemptions include:

• Homeowner exemption

• If you own a home and it is your principal place of residence on January 1, you

may apply for an exemption of $7,000 from your assessed value.

• New property owners will automatically receive a Claim For Homeowners'

Property Tax Exemption.

• Homeowners’ Exemptions may also apply to a supplemental assessment if the

prior owner did not claim the exemption.

• Military Active Duty Exemptions

• Veterans

• Property tax assistance for senior citizens, blind or disabled persons

• Disaster Relief

• Decline in-Value Review

• Eminent Domain

• Solar Energy System

• Institutional Property

• Builders

Market Value vs. Assessed Value

• Market Value is the market-driven prices of such property at a given place and time

• The price a home could be sold for.

• Assessed value of real property is determined by the Assessor at the time property is purchased, typically the sales price

Assessed value will then become the base year value (what is used to determine your taxes).

PROP 13

Proposition 13 is the prop that establishes how property taxes are collected.

- When you buy a home, the Assessor receives a copy of the deed and determines

whether a reappraisal is required under State law. Typically the purchase price is used

and this becomes your permanent tax basis (base year value)

- This past year property taxes are at 1% of the assessed value (+ direct

assessments, community college and unified school taxes)

- Direct assessments include:

- Safe clean water tax, Flood control tax, Measure A, Trauma/ Emergency

Services

- Increases in assessed value are limited to 2% annually

- Property only reassessed for change in ownership or new construction (this includes

additions in the form of an ADU)

- Exclusions from reassessment

- Seniors

- Disabilities

- Natural disasters

- Parent to child transfers (only IF they are primary residences and meet certain

requirements of Prop 19)

EXAMPLE - PROPERTY TAX BILL

- Example uses a $970,000 assessed value with a $14,000 homestead exemption so taxable value is $956,000.

UNDERSTANDING THE NEW PROP 19

Inheriting Property

• Proposition 19, or the Home Protection for Seniors, Severely Disabled, Families and

Victims of Wildfire or Natural Disasters Act, is a Constitutional Amendment that imposes

new limits on property tax benefits for inherited family property.

• Under Proposition 19, a child or children may keep the lower property tax base of the

parent(s) ONLY if the property is the principal residence of the parent(s) and the

child or children make it their principal residence within one year.

What we know so far:

- Portability of property tax basis for seniors (Effective April 2021)

- Allows homeowners 55+ or disabled to transfer that assessed value with them when

they sell their home and purchase a new one

- Transfer property tax anywhere in the state

- Eligible property owners will be able to use this 3 times

- Limits tax benefits for those inheriting property [parent/ grandparent to child/grandchild transfer] – (Effective Feb 16th, 2021)

- The property being transferred must be primary residence of parent/grandparent to be

excluded from reassessment

- Child/ grand child must make the property their primary residence within 1 year of

the transfer

- Inherited tax basis does have limits (see below for value test example)

**CHECK OUT COUNTY ASSESSOR SITE FOR ADDITIONAL INFORMATION AND FAQ’s ON PROP 19**

https://assessor.lacounty.gov/prop19/