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If you understand the rules, paying your property taxes in San Diego is a rather simple procedure. If you don’t, you could end up confused and may not pay your taxes on time, which will lead to owing extra money and penalties. On the other hand, if you are familiar with the guidelines and how everything works, you won’t need to worry about the intricacies because you will be aware of when, how, and how much is expected. To learn all you need to know about paying property taxes, including specifics on exemptions and credits, read this article.
Many homeowners are confused about the due dates for their property taxes. Unlike other states, the fiscal year for property taxes begins on July 1 each year. You should also be aware that these taxes are paid twice a year. If you haven’t owned your home for a full year, you’ll get a pro-rated bill, so you’ll still have to pay these taxes.
The first payment is due on December 10th, and the second payment is due on April 10th. Payments must be postmarked by these dates, not received by the tax collector’s office by that date.
However, you don’t want to put off paying your taxes since it might have long-term consequences. If you do not pay by these dates, you may face late penalty fines or worse, depending on how much you owe or how late you paid a bill. All of this information will be listed on your tax bill, but it never hurts to do your own research.
How Tax Rates Are Calculated
Understanding how your property taxes are calculated is important. The San Diego County Assessor determines the value of each house based on age, size, location, and other factors. The taxes are calculated once that assessment has been done.
Property taxes are equivalent to 1% of the value of your property, plus any bonds, fees or special charges. These bonds will also appear on your tax bills, so make sure you read the entire bill to understand what you are paying for. There are limits to how much your taxes can be raised each year as specified under California State Law (Prop 13), so they don’t skyrocket from one year to the next. Although the taxes can’t be raised more than 2 percent a year, they can go up, so it’s possible your bill will increase every year.
Homeowners Property Tax Exemption
When it comes to paying property taxes, though, all is not lost. You may be eligible for a variety of exemptions, the most important of which is the Homeowner’s Property Tax Exemption. The Assessor’s Office offers this service through the state of California. It allows you to earn a $7,000 reduction in your property’s assessed value, or a savings of roughly $70 each year.
The nice part is that you may be eligible for it for more than one year, and all you have to do is fill out an application to find out if you are. You must apply for this exemption before February 15th for the entire amount. If you do not, you will not receive the entire exemption amount. However, you should not have to fill out the application more than once because you will automatically receive this exemption for as long as you qualify.
Homeowners Tax Deductions and Credits
In addition to exemptions, you may be able to reduce your property taxes through deductions and credits.
Here are some of the most common:
- Mortgage Interest. You can deduct a portion of the interest you pay on your mortgage charges each year from your taxes if your loan was under $1,000,000.
- Property Taxes. Property taxes on your house are deductible each year, but only for the amount you paid; additional costs are not included.
- Home Office. If you work from home and follow other relevant laws for a home office, you can get a home office deduction, which amount to about $5 a square foot, up to 300 feet.
- Energy Upgrades. When you improve your home with energy-efficient items such as a/c units or windows, you can receive a tax credit of 10% of the cost of these items, up to $500.
- Home Improvements. When upgrading their homes, some people find that they need to take out loans. If you meet the requirements, you may be able to deduct these loans from your taxes.
- Natural Disasters. If you live in an area that has been the site of a natural disaster, you can get a property tax deduction, granted your county was declared a disaster area.
Supplemental Property Taxes
In addition to your regular property taxes, you also pay supplemental property taxes on your home. When someone buys a house in San Diego, the property’s value is appraised. Calculating this ensures that the new owners pay the appropriate amount of tax.
The difference in taxes after they are assessed is reflected in a supplementary bill. One advantage is that this sum might be bigger or lower, which could work in your favor. If you purchased a property within the previous year or made significant improvements, you will receive one of these bills. After that, the updated assessment amount is included in your property taxes.
Can I Contest The Assessment?
Yes. You have the right to dispute any assessment made on your property. The Assessment Appeals Board must receive your appeal within 60 days of receiving the bill. They’ll decide if the property was accurately assessed and how much you’ll owe. But, keep in mind that this appeals process does not relieve you of the responsibility to pay your regular property tax bills, so make sure you pay them on time. You’ll still be responsible for them.
Capital Gains Tax on Real Estate
Capital gains are another instance in which you may be required to pay taxes on your property. When you sell one of your assets for more money than you paid for it, you realize a capital gain. In this situation, it refers to your home or property. The profit you made from this kind of sale is subject to taxation. For instance, you would be required to pay capital gains tax on the $50,000 profit if you bought a property for $100,000 and sold it for $150,000. Your income determines how much tax you will have to pay, so the more you earn each year, the more tax you will probably have to pay.
Important Information To New Home Buyers
It is possible to save on costly penalties if, prior to your purchase, you make sure there are no prior delinquent taxes due on the property, and if there are, pre-arrange whether you or the seller is going to be responsible for paying the amounts due. I make it a priority to closely look at title to ensure that you have a clean title at closing.
If property is purchased in November, determine who is to pay the first installment due on or before December 10 for the period of July 1 through December 30.
Remember that as the new owner of the property, you are responsible for timely payment of property taxes under California law. DO NOT EXPECT TO BE NOTIFIED OR TO RECEIVE A TAX BILL. There may be none coming if it is being paid by your lender.
Important Dates To Remember:
July 1 – Fiscal Year Begins
September – Original Secured Property Tax Bills mailed out.
November 1 – First installment due (Secured Property Tax) and delinquent Unsecured accounts are charged additional penalties of 1½% until paid.
December 10 – Deadline for First Installment Payment. A 10% penalty is added after 5:00 p.m.*
February 1 – Second installment due (Secured Property Tax)
April 10 – Deadline for Second Installment Payment. A 10% penalty plus $10.00 cost is added after 5:00 p.m. *
May – Delinquent notices mailed for any unpaid, regular current taxes
June 30 – Fiscal Year Ends
July 1 – Delinquent Secured accounts are transferred to delinquent tax roll and additional penalties added at 1 ½% per month on any unpaid tax amounts, plus $15.00 redemption fee
*If a delinquent date falls on a weekend or holiday, the delinquent date is the next business day
If you would like to dig in deeper, here are a few useful links:
I hope you found this information useful. Please remember I am not an accountant or tax advisor. Be sure to consult with an appropriate professional to evaluate any decisions that might impact your property taxes, liability, etc.
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San Diego, CA 92109
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