How to Lower Your Property Taxes in California

This video covers how property tax is calculated and how you can pay a lower overall property tax. By the time you are already paying a certain amount, it’s largely too late. So it takes careful planning before you even buy a place to nab the best position. When you already have an assessment of property value, there are other options such as contesting it.

How’s it going everybody this is beat the bush today i’m gonna talk about a topic that is highly sought after which is how to lower your property taxes now for me i am located in california so i know the most about property taxes over here and not so much in other states so all of these things i’m gonna be talking about mainly pertains to california now a lot of

You have looked at my budget and saw that wow you know your living expenses is extremely low because i paid off my mortgage so i only have to pay for my hoa and property taxes combined the total cost of this is extremely low and a lot of you wondered how i got it so low it’s nothing magical i’m not doing anything against the law over here there’s no tip or trick

But it’s mainly the timing of the market that got me at such a low rate let me explain i bought this place sometime in 2010 this is pretty much at the bottom of the market and since then the property prices has basically doubled in price or more so for someone that bought it around that time 2010 i’m going to be paying about half the property tax as someone that is

Buying a property today now the interesting thing about california is we have this thing called prop 13 which essentially limits the increase of your property taxes from year to year it essentially caps your property tax at 1% of your assessed value and on top of this every single year thereafter they can increase the property tax however it’s capped at 2% maximum

Every single year so you can imagine if your property price rise by 6% every single year or 100% in a you know 8 or 9 years or so the property tax increase is not gonna be all that much compared to the property values so you’re gonna have some people that have been squatting on their houses like myself and you’re gonna be paying at a preferred rate from when you

Purchased the property the idea behind this proposition initially was that people did not want to worry about their increasing home prices because if the price of their home increases to a certain extent like right now then they essentially might not be able to afford their property taxes if it becomes too expensive for now i’m not gonna get into if proposition

13 is a correct thing to do or not in terms of property prices but i’m just gonna talk about how you can lower your property taxes from various tactics that you can employ now this proposition 13 is basically based on your property assessed value now what does this mean assessed value is essentially what you paid for your property however you can get reassessed if

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You do some sort of home improvement on your property for example you add another floor you add another room in the yard or something and then you’re gonna get reassessed and then all of a sudden your property tax is gonna go up so if you want to keep your property taxes low you want to avoid adding things to your property to avoid increasing your property value or

So if you want to minimize your property value don’t build on your house to increase your property value do not increase the curb appeal you know sometimes when you sell your house you want to increase a curb appeal to increase our price but when you’re gonna get reassessed when you’re living in it you don’t want to increase the curb appeal because then that would

Increase your property taxes once you get an assessed value for your home you can also challenge this you can use information from around your neighborhood of similar properties and if they’re assessed value happens to be lower than yours you can go hey what happened here why can’t my assessed file you be the same you know that the square footage is the same the

Number of rooms is the same why is yours a little bit higher but you want to be very careful about this because if your assessed value is actually higher then if you appeal to this and the assessor comes in and go no you know your value was actually lowered before then all of a sudden you shot yourself in the foot and increase your property value instead so be

Very careful if your assessed value is much lower than what you think the value of your home is going to be if you have a situation where an assessor actually comes in to look at your home you want to point out all the bad things of your home if they only notice the new things and they missed a crack in the wall they miss you know some whole you know some damage

Or something then they might assess the value of your home higher than it’s supposed to be so you want to actually point out the bad things and let them notice the good things don’t upgrade anything that you can don’t change the windows don’t change the carpet don’t get real remodeling for the kitchen if you’re gonna live in the home long term you might actually

Want to make these home improvement because these are for yourself but know that whenever you do something the property tax value might actually go higher and then you have to pay more consistently ever after from there in california there’s another thing called prop 60 for people 55 years and older now i know a lot of people are not 55 yet but this is something

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You want to keep in mind for basically personal wealth planning you want to know that these propositions are out there for you to use so that you can minimize your property taxes as you get older what this proposition tries to do is that if you want to move to another home maybe a cheaper home for example let’s say you bought a home that’s only 100k you only need

To pay $1,000 in property tax every single year the property over the course of 20 30 years increased from 100k to 500k and then you kind of look well you know maybe you want to move somewhere else you want to take some cash out of the home because you no longer need to live at a certain area maybe for the schools or something so you want to move to somewhere

Else that’s a little bit cheaper maybe it’s only $400,000 so during that transaction you can pocket another 100k right and then if you’re a 55 or older you can essentially move that $1,000 property tax into that new place that you’re moving so this is a really great deal right if this proposition wasn’t there then if you move to this new $400,000 home all of a

Sudden your property taxes is gonna be a lot more than what was there before which is $1,000 a year now for this proposition to work you actually have to move in the same county so this limits the range of places that you can move or if you’re moving to one of the eight counties in california that allows the transfer of property taxes there are a bunch of other

Requirements that goes along with transferring your property taxes so do look into this all i want to cover in this video is that you can transfer it transfer some very low property tax form one place to another as long as you are older than 55 there’s also a thing called home sale exemption here so this essentially makes it so that you do not have to pay capital

Gains taxes on the home appreciation value we know that in california the price goes up significantly and if you bought in some time ago and then you made some money you don’t want to pay taxes on this and the home exemption is 250 k for a single person and 500 k for a married couple you do have to live in the property for two years and if you’re a single person

You have to live in it yourself for two years and if you’re a couple both of you actually have to live in it for two years in order to qualify for this now i covered ways where you can actually lower your property taxes but i think the best way to drastically lower it because when you get your home reassessed right it’s just gonna move by a little bit but you can

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Make leaps and bounds if you have great market timing because if you happen to buy a home at a very low value which is something that i personally did you pay very little for the home you gain a lot when the home appreciates you also pay a very low property tax of course the housing costs right now it’s incredible maybe in the future it’s gonna dip down and it might

Be very good to hold on to some kind of down payment just in case that the home values comes down and then you can go in there when the markets down and just pounce on all these properties when no one else has the down payment to buy any homes remember back in 2008 everyone was broke the costs of the homes were very low and people can’t afford to buy it because you

Know it’s a housing crisis people don’t have money to do it but that is the point where you need your down payment so that you can scoop up all those low property prices and it’s in two folds you can pay basically a lifetime of very low property taxes as well as make an incredible gain on the property value itself when it does rebound for people that have a really

Low property tax right now you can imagine that once you sell it’s not actually a very good thing because then you lose out on that low property value what is better here is try to keep on hold on to the property instead and rent it out because the rent price sort of factors in the current property tax right now right whoever’s paying the rent right now they are

Partially compensating for the current property tax value so when you rent out a home that you already own that has a very low property tax value then you can essentially take on my very high rental income while paying a very low property tax i hope all this was very interesting for you i know it’s not like a silver bullet for anyone buying a property right now

So it does have some market timing characteristics to it and it also has a little bit of wealth planning involved in order to get your property tax low thanks for watching this video don’t forget to give me a like comment down below let me know what you think of all these tactics is just by the books based on the proposition based on law here don’t forget to push

That subscribe button and ring that bell icon thanks for watching

Transcribed from video
How to Lower Your Property Taxes in California By BeatTheBush

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