How to find property taxes

Question

I am a new investor, and my agent sent me a duplex that shows some promise. I want to plug the numbers into the BP rental calculator, but I can't find the property tax. The listing is not public so I can't use realtor.com, Zillow, etc.

I tried going to my county assessor's website, but it is extremely cumbersome to navigate. I am wondering if there are other ways I can locate the property tax bill on my duplex?

Thanks so much!

Kyle J. · Answer

@Michael Faudoa  In California, the assessed value of a property for tax purposes has no relevance to the market/sales price of that a property.  So definitely don't use the current property tax numbers when doing your calculations.  I have properties that are currently assessed easily less than half of what they would actually sell for thanks to Prop 13.

However, property taxes are easy to estimate.  They vary slightly city to city and county to county across the state, but if you're primarily investing within the same city, or even within the same county, they don't vary too widely.

The base rate across the state is 1%, and then other things usually get added on to that like voter–approved debt repayments, Mello–Roos taxes, special assessments, etc.  However, the averages across the whole state fall somewhere in the 1.1 to 1.6% bracket.  Just find where they fall for your area and then use that number each time you run your numbers.  That'll give you a good approximation.

If all that sounds confusing, let me give you an example.  In my area, property taxes generally fall somewhere around 1.1% (give or take .1%).  Just to be safe, I usually use 1.2%.  So if I'm considering putting in an offer on a $200k property, I estimate taxes to be $2,400/yr ($200,000 x .012 = $2,400).  No need to look up the assessed value or go to the assessor's office.  Takes less than 30 seconds.

Dan H. · Answer

Due to prop 13 you cannot use existing property tax as a basis for the property tax on a new purchase.  Fortunately there is a fairly small window of what virtually all newly purchased properties will have for their newly assessed property taxes.

The property tax is almost for sure going to be between 1% and 1.25% of the purchase annually.  Why the variance?  It is because of things like local bonds, trash service included in the property tax, etc.  So to be safe I use 1.25% in my analysis.  Typically it is closer to 1.1%.

So on a $500K purchase, at 1.1% you will pay $5.5K in property tax or just under $500/month.

Due to prop 13 the property tax will go up very slowly.  I used to have the max increase memorized but it is something like 2% maximum increase (something close to that).  This is on both investment and owner occupied.   This implies if the property goes up 10% the year after purchase, your property tax will only go up the Prop 13 maximum (I believe 2%).

This implies that when you purchase a new property your next door neighbor could be paying a fraction of the property that you are paying.

Good luck

Alan Fitzpatrick · Answer

There should be a way to find it online. Unless you're very rural the county will have some sort of system set up for you to check.

You can ask in person but you're going to be making a lot of trips once you really start looking.

Redgy Saint-Germain · Answer

@Michael Faudoa

Your city assessor`s office or the county records will tell you the taxes on the property, at least the one for the prior year

Dan H. · Answer

No.  There are different types of insurance policies such as full replacement value or value of structure (cost of RE with structure minus value of the land) but the assessed value should not be used to set the insured value.

Michael Faudoa · Answer

@Matt Devincenzo this property is somewhere else- if I was buying a property in San Diego for $350k I'd probably have to pack heat haha.

Michael Faudoa · Answer

@Dan Heuschele Would a property's assessment affect insurance prices at all?

Dan H. · Answer

It is a good thing for long term property owners.  This includes buy n hold RE investors.  For example I have a property worth ~$600k that has an accessed value at just over $200k.

Is it good for the schools, infra structure, etc.?   Possibly not.  I somewhat think that 2% increase plus market reset on sale should be enough revenue.

By the way I never try to find the exact rate for the area.  I use 1.25% for my prop tax estimate as any cash flow estimate has many estimates.  For example vacancy, maintenance/cap ex, misc, etc are based on estimates.  The actual expenses will vary.

Michael Faudoa · Answer

@Kyle J.@Dan Heuschele Thank you so much guys, your comments really revolutionized this process for me. So instead of even bothering to look up current property taxes, I can just find out what my area's base property tax rate is? Do you know how to go about that?

Also, so is prop 13 a good thing...? Since homes tend to be under assessed, which means less tax?

Grant Rothenburger · Answer

Market value rarely = to assessed value. Usually assessed value is higher around me, not lower. @Michael Faudoa

How to find property taxes

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