California Real Estate – Investing in Californian real estate means understanding its taxation. For good investments in property in L.A., San Francisco, or San Diego, you must plan ahead and understand property taxes in the California’s counties. Buying a house in Los Angeles County means different tax structures than in Orange County. In this article you’ll find all the most important details and facts about California property taxes, how to pay these taxes, what is taxed, and even what property tax is. Included is a list of California counties, with the most expensive counties for real estate in California highlighted.
Paying a House in California
California is a dream destination. For people from all over the world it represents the American dream, beach lifestyle, bathing in the sun with a cocktail in hand. Home to Hollywood, but also Silicon Valley, this is a state where things are happening. For this reason it is also a much beloved destination for buying real estate. Whether to live in, or to invest your capital, California is a fairly safe bet. It also has a fairly low property tax rate of 0,77% But where to start? It’s important to get a lay of the land about where who pays how much in property taxes. If you’re looking to invest in real estate, don’t forget about additional taxes when buying a house.
What are property taxes?
Property Taxes are ad-valorem taxes which you pay for owning property, meaning that it is based on the monetary value which is estimated to be attached to an item, piece of land, property, etc. A property appraiser provides the basis for calculation.
Property tax is often confused as being a tax on real estate property. Yet this is a misconception. The largest proportion of property taxes come from real estate, because this is the most expensive property most people own. Yet property taxes can also be levied on airplanes, computers, furniture, etc. When buying a house, these must be paid in advance, and then received back from the seller. Property taxes are typically a rate which is multiplied by the estimated value of the property. This value is estimated by an appraiser, and takes into account location, age, etc.
Property taxes are a complicated concept. To learn more about U.S. property taxes, when you have to pay them, and how much each state pays in property taxes,
What is Taxed under California Property Tax?
In different states and counties, different items count as ‘property’. In California, it is important to distinguish real property and personal property. Personal property is taxed differently than real property, and can be exempt from taxation, or have a different type of taxation.
Real Property – Everything Taxed as Property Tax
What is taxed in California is of course very different from things taxed in New York or Miami. Real property is what is often the first thought when thinking about property tax. Houses, land, or any improvements made on property of which one is an owner. The following things count as real property
- Mines or quarries, as well as all timber
- Improvements, including buildings, fences, ornamental trees, etc.
Personal Property – What Counts as Property?
Personal property is other large property. By definition, personal property is all tangible or intangible property which is not real property (see above). Some examples are tractors, boats, or even tools. Yet, not everything is taxed, for example personal effects, household goods, etc. are exempt. In California there are property taxes on bonds, mortgages, capital stock shares, etc.
How do Property Taxes Work?
In the U.S., because there are state as well as county and city property taxes, it is a complicated system. If you live in New York, you may even have to account for additional taxes such as a mansion tax. New York property taxes are of course unique in this. In general, for any given piece of land you have state property taxes as well as county property taxes. In addition to this, some cities levy additional taxes for property. Therefore, when owning property, it is important to be informed about property taxes at all government levels. In California, since 1933, the state no longer levies property taxes on any items except privately owned railroad cars. Nowadays, the ≈ $65 worth of property tax collected are mostly from schools and school districts (54%).
All across California though, you are privy to a tax exemption on your primary residence. This means that the assessed value of the property is reduced by $7.000. If you want to learn more about tax exemptions for real estate in the U.S., take a look at our article
Average in the U.S. – Am I Paying High Property Taxes?
In general, the U.S. has fairly low property taxes. Although, it is difficult to compare to other countries as all have their own systems. Still, investing in real estate in the U.S. is all the more attractive for the low costs which are attached to owning property and buildings. Across states, tax rates for owning property are change strongly. The average tax rate in other mega cities is comparable, Miami property tax is at 0,94%.
- Average property tax rate – 1.1%
Property Taxes in California Counties
California, along with New York, has fairly high property taxes. Although there are no counties with excessively high taxes (the highest property tax in the U.S. is found in five counties near New York City). The highest property Tax in California is found in Marin County, Santa Clara County and San Mateo County. In Los Angeles County, the median property tax is comparatively low, slightly higher in Orange County, with San Diego County the lowest tax rate of the large counties
Property Tax Rates in Los Angeles
Los Angeles County is most famous for its metropolis of course. Home to Hollywood, Venice Beach, and quintessential to everything known worldwide about California, investing in property in L.A. county means a strong real estate market unlikely to crash any time soon.
- Median House Price – $495.800
- Avg. Property Tax Rate – 0.75%
Property Tax Rates in Santa Clara County
Santa Clara county has a significant property tax bill, with the median property tax being paid amounting to $6.183. Santa Clara is home to San Jose, and includes the famous Palo Alto. It is among the four counties in the San Francisco Bay Area which have disproportionately high property tax rates (the others being Marin, Alameda, and San Mateo County)
- Median House Price – $829.600
- Avg. Property Tax Rate – 0.75%
Property Tax Rates in San Diego County
San Diego County is home to San Diego, a city known worldwide. With a population of 3.34 mio., it is the second biggest county in California. In the city of San Diego, some 53% of the population lives in rental properties, making these a strong investment. The median property tax here is $3.672.
- Median House Price – $484.900
- Avg. Property Tax Rate – 0.76%
Property Tax Rates in Marin County
The highest property tax bill can be found in Marin county. With a median property tax of $7.063 being paid by each property owner in the county. This may be down to its close proximity to San Francisco in the Bay Area. Marin County is also among the most expensive counties in all of the U.S., reflected in its median house price of $908.000.
- Median House Price – $908.800
- Avg. Property Tax Rate – 0.78%
Property Tax Rates in Modoc County
Modoc County has the lowest median property tax paid for California counties. This is down to the low value of most properties owned here. With few attractions and the only city being Alturas, the population of 8.777 people makes this county less attractive for real estate investments.
- Median House Price – $143.100
- Avg. Property Tax Rate – 0.71%
Property Tax Rates in Orange County
Orange County, known from series such as OC California, or from the fact that it is one of the counties which make up Los Angeles. Orange County is considered an attractive real estate market. Mostly suited to buying intentions, many investors have found success in this oceanside paradise. The median property tax paid here is slightly higher than elsewhere at $4.247.
- Median House Price – $620.500
- Avg. Property Tax Rate – 0.68%
All Property Tax Rates – California Counties
These are the rankings for the lowest and highest property tax rates in Californian Counties. Above are some of the most important property tax rates to know for California. Below a comprehensive list of all counties, and the average effective property tax rate, ranked from lowest average effective property tax rate to highest. Note, effective tax rate takes into account additional exemptions or additions which come about as a result of district or municipal property taxes.
- Trinity County – 0.51%
- San Francisco County – 0.65%
- San Mateo County – 0.66%
- Santa Cruz County – 0.66%
- Humboldt County – 0.67%
- Mendocino County – 0.68%
- Orange County – 0.68%
- Santa Barbara County – 0.68%
- Colusa County – 0.69%
- Mariposa County – 0.70%
- Napa County – 0.70%
- Tehama County – 0.70%
- Modoc County – 0.71%
- Monterey County – 0.72%
- Plumas County – 0.72%
- Sonoma County – 0.72%
- Butte County – 0.73%
- Inyo County – 0.73%
- San Luis Obispo County – 0.73%
- Tuolumne County – 0.73%
- Amador County – 0.74%
- Ventura County – 0.74%
- Glenn County – 0.75%
- Los Angeles County – 0.75%
- Mono County – 0.75%
- Santa Clara County – 0.75%
- Madera County – 0.76%
- San Diego County – 0.76%
- Shasta County – 0.76%
- El Dorado County – 0.77%
- Kings County – 0.78%
- Lassen County – 0.78%
- Marin County – 0.78%
- Alameda County – 0.79%
- Siskiyou County – 0.79%
- Stanislaus County – 0.79%
- Tulare County – 0.79%
- Del Norte County – 0.80%
- Nevada County – 0.80%
- Merced County – 0.81%
- San Benito County – 0.82%
- Solano County – 0.82%
- San Bernardino County – 0.83%
- Alpine County – 0.84%
- Calaveras County – 0.84%
- Fresno County – 0.84%
- Sacramento County – 0.84%
- Contra Costa County – 0.87%
- Sutter County – 0.88%
- Yolo County – 0.88%
- Yuba County – 0.88%
- Lake County – 0.89%
- San Joaquin County – 0.89%
- Imperial County – 0.91%
- Placer County – 0.93%
- Sierra County – 0.95%
- Riverside County – 0.97%
- Kern County – 1.01%
Property Tax in California
No matter what your intentions are with real estate property in California, the counties and their tax regulations make up an important part of the knowledge bank which you need to build up before deciding how, when, and where to invest. California is an attractive real estate investment market for many reasons. Its kilometers of beaches, variety in nature, mix of hip and luxury, and hundreds of other reasons make it a numebr one destination for those looking to put their money to good use.
Investing in real estate is difficult and complicated, with taxes being a significant part of this. Our guide is sure to be of help to you,