What are Property Taxes & why do we pay them?
When you buy a home, your monthly payment may include your mortgage, interest, property taxes, and insurance.
But have you ever wondered… why do we have to pay property taxes?
And where does that money actually go?
First, what are property taxes?
Let's start with the basics,
Taxes are money we pay to the government to help pay for public services in our communities.
Property taxes are one type of tax that homeowners pay based on the value of their property.
Here in California, that money helps pay for services such as:
🏫 Public schools: teachers, classrooms, and school programs.
🚒 Fire protection: firefighters and emergency services.
🚓 Police and public safety: keeping our communities safe.
🌳 Parks and local services: maintaining public spaces and community facilities.
In simple terms, property taxes help pay for many of the services that keep our communities running!
How much are property taxes?
In California, the basic property tax rate is 1% of your home's taxable value per year, plus additional local taxes and charges.
But what does taxable value mean?
It's simply the value the county uses to calculate your property taxes.
When you purchase a home, this is usually based on the price you paid.
Here's an example:
Let's say you purchase a home for $500,000.
Your basic property taxes would be approximately:
$5,000 per year — or $417 per month.
Keep in mind that additional local taxes and charges may make your actual bill higher.
How do you pay them?
You may already be paying your property taxes as part of your monthly mortgage payment!
If you have an escrow account, your mortgage company collects money each month for your property taxes and homeowners insurance.
That money is saved in your escrow account until those bills are due.
In California, property taxes are generally paid twice a year.
If you don't have an escrow account, you'll pay your property taxes directly to the county.
Do property taxes stay the same forever?
Not necessarily!
In California, Proposition 13 generally limits how much the value used to calculate your property taxes can increase each year; usually no more than 2% annually.
However, purchasing a home or completing new construction can change that value.
Other taxes and charges on your bill can change too.
Want to learn more?
Understanding property taxes is an important part of knowing the true cost of owning a home! 🏡
Until the next one,
Claudia
For educational purposes only. Property taxes vary by property and location. Contact your County Assessor or Tax Collector for information specific to your home.
