We only own property to the extent that we can pay the legal taxes that apply to it. Here are the ten most common questions you need to know the answers to if you own or plan to one day own property.
1. How is property tax calculated in California? Annual property taxes will generally be 1% to 1.25% of the home’s sales price at the time of purchase.
2. Can property taxes go up each year? Unfortunately, the answer is yes. In California the maximum property tax increase is 2% of the previous rate.
3. When do I have to pay property taxes? Property taxes are paid twice a year. One is billed in February and is due no later than April 10; the other is billed in November and is due no later than December 10
4. What happens to the tax I already paid this year if I sell my house? This is handled in the closing escrow process. If you have already paid taxes for the past time of your occupancy, the buyer will refund the difference.
5. What is a seized account? If your lender is paying your taxes and insurance as part of your monthly payment and your down payment on the house was less than 20%, they will require you to have what is known as a lien account.
6. I have an impound account: why do I get a refund in some years and a payment increase in others to fund the impound account? Your lender is collecting funds from you to pay your taxes and insurance premiums on your behalf. When your taxes or premiums go up or down, they adjust the amount they charge you.
7. Can I just pay all my property taxes in December? Yes you can, but it may have some tax implications. Check to see if there are any downsides to this in your county.
8. What is Mello-Roos? Mello-Roos is a fund created for builders to borrow to install the necessary infrastructure for a new development: sewer, sidewalks, street lighting, etc. The loans are paid for through your property taxes.
9. How do I know if I am buying a ‘Mello-Roos’ house? The seller is legally obliged to inform you. The tax bill, which is public information, will also include this.
10. How long does Mello-Roos apply to a property? Typically 10-20 years.