Every property tax base in California trends from 0-2% every year, this percentage increase is based on the Consumer Price Index that gauges inflation. Usually, most California taxpayers pay about 1.25% of their assessed value in actual property taxes per year. So if you purchased your residence for $100,000, and it was market value, your base value would be $100,000. Since you would pay 1.25% of the assessed value, your tax bill the first year would be about $1,250. Your property tax bill for the first year would be pro-rated for the part of the year you owned the house and/or you would get credit in escrow for the amount the previous homeowner owed.

For California residents the base value is constant unless there is a re-assessable event, the only variation is the two percent trend based on Proposition 13. So the second year the increases would max out at a $2,000 increase based on the 2% limit. The assessed value would increase from $100,000 to $102,000 which means the property taxes would increase from $1,250 the first year to $1,275 the second year. The 2% increase compounds over time, so the amount that it goes up also increases over time because the value does compound. Some years the percentage is less than 2%, based on the Consumer Price Index.

When specific exemptions are applied to your assessed value, it will not increase annually for inflation. If a house has a Proposition 8 decline in value (temporary decline in value based on market decline) the value will not trend. The assessed value is evaluated annually by the Assessors Office to decide if it should be modified. Similarly, if there is a Disaster Relief exemption also called Misfortune and Calamity applied to a house the assessed value will not increase, the Office of the Assessor will visit the home every year to see the residence repairs and will adjust the value or not based on what has been repaired. In addition, exemptions for the disabled and/or veterans do not trend either. Normally, your base value will increase up to 2% annually unless an exemption that applies.

Normally speaking though most properties in California will trend annually and as a result of this each property owner will have a slight increase in property taxes annually. What happens over a period of about thirty years is your assessed value will more than double. For example, my parents bought their home in 1979 for $80,500 and the current assessed value for that property based on the $80,500 thirty years ago is $138,783 so in thirty years they went from paying $1,006 per year to $1,734 per year. If you start out with a property tax base of $500,000 in thirty years your assessed value will be $887,922 which means you will start off paying $6,250 per year and in thirty years be paying $11,099 per year!

If you understand how reduce that property tax base you will save thousands in the long run! If you bought your residence for $500,000 and today your property is only worth $300,000 you will save thousands! With a $300,000 tax base you will pay $3,750 per year and in 30 years your assessed value will be about $532,753 so you will pay about $6,659 per year in property taxes. Don’t settle for the temporary reduction in value the Assessor is offering right now called Proposition 8 Decline in Value. So PERMANENTLY lowering your property tax base by $200,000 will save you EVERY year you own your property! The California Little Black Book shows you how!

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.