**In case you can not view this video here, please click the link below to view All About Property Taxes in Pleasanton CA on my YouTube channel: https://www.youtube.com/watch?v=MFPyoxn1kU8**
00:28: Welcome to the 680 home video channel; a web series where we answer all of your real estate questions. I’m your host, Theodora, and I’m talking to local East Bay real estate broker, Doug Buenz.
00:41: Hi Doug, it’s great to see you. Today we’re discussing property taxes. Doug, how much am I going to expect to pay on my property taxes?
00:52: Property taxes in the East Bay area average about 1.2% of the purchase price. So for a million dollar house, you’ll pay about $12,000 a year or $1,000 a month. The assessed value of the property is typically the sales price. So whenever you pay for the property, that’s the assessed value. Because of Prop 13, the assessed value is limited to a 2% increase per year.
1:21: The assessed value in a declining market, the market value of the property could go down and the assessor’s office will lower the assessed value of a property. However, you have to appeal that, so surprisingly they won’t just voluntarily give the money up, you have to go chase it out of them.
1:40: Tax years; the property tax years split. It runs from July 1st to June 30th so there are two halves to a property tax payment. The first half is due in November and is late in December. The second half which covers January through June is due in March and late in April.
2:02: There’s another facet to property taxes when you purchase a property and that’s supplemental tax bills. Basically, it works like this: if a property sells, it takes the assessor’s office sometimes 2, 3, and maybe as many as 6 months to find out that the property has changed hands and the assessed value has gone up which is normally the case.
2:27: When they do find out, they send out what’s called a supplemental tax bill. This is basically the difference between what you should have been paying as a new purchaser and what you were paying after that point because until they catch up to the sale, you’re paying at the old owner’s tax rates. So you get a bill for the difference and that’s called a supplemental tax bill.
2:49: There’s another facet to property taxes I get asked about a lot and that’s called Mello-Roos. No, Mello-Roos is not the latest alternative rock band. It refers to an assessment district that is set up to find improvements in infrastructure for new developments usually in urban or suburban areas. They don’t have healthy tax basis and don’t have the funds available to put in sewer and water, and street and street lights in those [3:20] facilities.
3:23: So in exchange for allowing the builder to build a new subdivisions in areas like this, they will make the builder responsible to put in the infrastructure and the builder will setup an assessment district and float bonds and get the bonds repaid through additional assessments on the property tax bill. So one of the questions you want to ask as a seller is, are there Mello-Roos taxes or special assessments associated with this property because that can very quickly add to the 1.2%. So that’s the story with Mello-Roos taxes.
4:00: Are property taxes tax deductible? The answer is yes. Property taxes are deductible. Are Mello-Roos taxes deductible? That’s not quite as clear. It looks like at this point the interest and maintenance portion of the Mello-Roos assessment is deductible and the rest are not. The actual capital improvement part is not. That’s obviously very complicated, so you probably want to see your tax professional about that.
4:26: Where other aspect of property taxes related is called a transfer tax. In California, most counties have what’s called a transfer tax. In this area, it’s $1.20 per thousand so if you sell a million dollar house, there’s $11,000 in a transfer tax that’s paid when the property sells. Normally the seller pays for that. It is negotiable but the normal practice is the seller pays for the county transfer tax. In addition to that, several cities have transfer taxes just for their city.
5:05: And in the East Bay here that can be as high as $4.40 per thousand, so literally 4 times than county transfer tax. And that’s not a pleasant surprise for many sellers when they go to the closing table. Usually city transfer taxes are split 50-50 between the buyer and the seller to hopefully mitigate the pain of that tax.
5:29: We’re starting to see more in California of what we call a private transfer taxes. Where builders and other individuals are putting in a deed at transfer tax due when the property sells or due to either the builder or private party every time the property sells. So especially if you are new in the area, you want to check to make sure there is no private transfer tax as well.
6:01: If you have real estate questions or need assistance, I do hope you’ll give me a call. I’m worthy of your trust.