We only own property to the extent that we can pay the legal taxes applied to it. Here are ten of the most common questions you should know the answers to if you own property or plan to own one someday.
1. How is Property Tax Calculated in California? Annual property taxes typically range from 1% to 1.25% of the home’s selling price at the time of purchase.
2. Can Property Taxes Increase Every Year? Unfortunately, the answer is yes. In California, the maximum tax increase for property is 2% of the previous rate.
3. When Should I Pay Property Tax? Property tax is paid twice a year. One billed in February and due April 10 at the latest; others are billed in November and due no later than December 10
4. What Happens to the Taxes I Paid This Year If I Sell My House? This is handled in the escrow process at closing. If you have paid tax for the elapsed time, the buyer will reimburse the difference.
5. What is an Impound Account? If your lender pays your taxes and insurance as part of your monthly payments to them and your down payment on the house is less than 20%, they will ask you to have what is known as a foreclosed account.
6. I have an Impound Account – Why Do I Get Refunds Some Years and Payments Raised in Others to Fund an Impound Account? Your lender collects funds from you to pay taxes and insurance premiums on your behalf. When your taxes or premiums go up or down, they adjust the amount collected from you.
7. Can I Simply Pay All My Property Taxes in December? Yes, you can – but there may be some tax implications. Check to see if there is a downside to this in your area.
8. What is Mello-Roos? Mello-Roos are funds set up to be borrowed by builders to put into the infrastructure needed for new construction – gutters, sidewalks, street lights, etc. The loan is repaid through your property taxes.
9. How do I know if I bought a ‘Mello-Roos’ house? The seller is legally required to notify you. The tax bill, which is public information, will also include this.
10. How Long is Mello-Roos Valid for a Property? Usually 10-20 years.