This blog accompanies the text, Real Estate Analysis: Environments and Activities by Julian Diaz III and J. Andrew Hansz. Student are encouraged to post assignments and original research papers to this blog. Please contact firstname.lastname@example.org for posting rights or to add your program to the blog. Some blog posts and objective questions maybe considered for publication in a future edition of the text.
Tuesday, November 12, 2013
Property taxes are taxes levied on any real or personal property. The property tax may be one of the most important taxes for a local government. This is because property taxes help fund public schools, libraries, and hospitals; local road construction and maintenance; and municipal offices and services. Many of the daily things tax payers take for granted. Property taxes are ad valorem meaning they are levied based on value. This means the value of the property determines the amount of the taxes owed based on the percentage of the property tax in place(Diaz).
In California the property tax has a 1 percent rate cap, this does not include other voter approved debt rates. The 1 percent rate cap was enacted in 1978 with the passing of Proposition 13. Before 1978 property tax values averaged around 3 percent of property value. Proposition 13 also included a provision stating that the assessed value of a property could not be raised more than 2% each year. The assessed value is to follow inflation or 2% and of whichever is lower becomes the increased assessed value(Alamo).
This can have a positive or negative affect on the property depending on market conditions. This means that the market rate could be significantly above or below the market rate of the property from sale. The assessed rate of the property also will be changed at the sale of the property as this shows the true market value of the property and the new starting point for the property tax.
There are properties that are exempt from property tax established in the constitution. These properties include hospitals, religious properties, charities, and non profit schools and colleges(Alamo).
Figure 7 shows the California property tax bill total of $55 billion making property taxes on of the largest revenue sources(Alamo).
This is just a brief account of property taxes in California and if you have more questions feel free to call your county assessor in order to get answers. They are typically busy but if you leave a number they will most likely get back to you within a couple of business days. The county treasurer is also another contact to get in touch with for questions regarding how your property taxes are being collected or spent. It is good to understand what you are being taxed for and where they are going.
Alamo, Chas, and Mark Whitaker. "Understanding California’s Property Taxes." Legislative Analyst's Office. N.p., n.d. Web. 9 Nov. 2013. <http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx>.
Diaz, Julian, and J. Andrew Hansz. Real estate analysis: environments and activities. Dubuque, IA: Kendall Hunt Pub. Co., 2010. Print.