Apart from mortgage payments, homeowner’s insurance, and utility bills, property taxes are a large portion of what you’ll pay for your home yearly and they should be something you plan for as one of your major housing expenses in the Bay Area. Here’s a quick refresher on what’s unique about San Francisco property taxes and what to expect after buying or refinancing a home. I’ll also cover how to appeal a property appraisal if you believe it’s too high.
San Francisco taxes “real property” meaning a home, vacation home, rental property, or land. When you buy a home in California, the assessed value of a property is equal to the purchase price. The assessed value of the home increases or decreases based on the change in the Consumer Price Index. There is currently a 2% cap on the rate of increase. California property taxes are governed by a State mandated law called Proposition 13 which was passed in fiscal year 1978 by California voters to limit property tax increases. On top of the California base tax rate, supplemental taxes are added on by the county. A home’s property tax can generally be calculated by multiplying the purchase price by 1.25%. To view the most current tax rates, visit San Francisco’s Supplemental Tax Calculator.
Property taxes are assessed based on a fiscal year beginning July 1st and ending June 30th and tax years are referred to as 2020/2021 and 2021/2022. Taxes are then billed in two equal installments with due dates and delinquent dates listed below:
|Installment||Period Covered||Due Date||Delinquent Date|
|#1||July 1 – Dec 31||Nov 1||Dec 10|
|#2||Jan1 – Jun 30||Feb 1||Apr 10|
If you are feeling particularly ambitious, you can pay the full tax for the year on the due date of the first installment.
When you receive your tax bill, reading and understanding it can be a lot to manage. To better understand how to read your property tax bill, view the “How to Read Your Property Tax Bill” guide from the SF Treasurer’s office. For a larger overview containing the tax timeline, assistance programs, and smart money coaching, read San Francisco’s official tax resource guide.
State law (Proposition 13, passed in 1978) requires the SF County Assessor to set a new taxable value of a home after each purchase. This assessed value, should reflect the market value (not necessarily the purchase price) of the property at the date of transfer. Every year thereafter, the assessed value will not go up by more than 2% if nothing has changed. Here is a graph inspired by the SF Treasury’s explaining in more detail how to anticipate first payments:
California provides a $7,000 reduction in the taxable value for a qualifying owner-occupied home. The home must have been the principal place of residence of the owner on the lien date, January 1st. To claim the exemption, make a one-time filing with the county assessor where the property is located. First-time filers on a property may file anytime after the property or claimant becomes eligible, but no later than February 15 to receive the full exemption for that year. It’s also important to note that when your home is no longer eligible for the exemption, the homeowner must notify the county before December 10 to avoid any penalties.
For further information on exemptions, please consult with your licensed CPA/accountant.
The housing market is rarely static, with fluctuations a bit like a roller coaster, changing frequently, going up and down. So it’s possible you pay taxes on an assessment that is no longer a valid market rate. If home values in your neighborhood are rise rising quickly, you may not want to volunteer that information. Even though your home’s market value is higher, your taxes may be based on a lower value, keeping them low.
When home values are falling, you should ensure that your taxes follow suit. An estimated 30 – 60% of homeowners in this country are over-taxed, according to the National Taxpayer’s Union.
Homeowners who disagree with the assessor’s valuation of the house have a right to appeal a property tax assessment. Despite this, fewer than 5 percent actually appeal, even though most of those who do so eventually win. For regular assessments, you may apply to the SF Assessor between July 2 and September 15th to see if that office will change the valuation. Here’s a handy Appealing Your Assessment checklist to make sure your ducks are in a row before starting your appeal.
It’s important to know that you are still required to pay the taxes when due, despite an open appeal. Penalty and interest charges may apply on any unpaid balance. If the appeal is granted, a refund will be issued.
If you have further questions, please refer to a California Licensed Real Estate Attorney.
He works tirelessly to ensure that each client, whether buying or selling, realizes the maximum value from their investment.