A typical Southern California owner who bought a home a decade ago for the median price (then, $348,000) likely will see the “base” tax rise about $77 this year, to around $4,000.
The new assessments will apply to property taxes due in two installments next December and April.
Southern California homeowners will see their property taxes rise at the maximum 2 percent for a second straight year, thanks to higher inflation rates and soaring real estate values. But increases would be worse were it not for Proposition 13, the 1978 tax measure that caps tax assessments at just 2 percent a year, even though home values are up around 7 percent in the past year.
Big Gains for Government Coffers
The increase means huge gains for the coffers of cities, county governments, schools and other institutions relying on property taxes, such as water districts and libraries. It’s also a shot in the arm for police, firefighters and public health agencies.
The assessments, for the most part, are a snapshot of where real estate markets stood at the end of last year and the start of 2018, the period upon which property tax assessments are based.
Most of the 6.5 percent assessment gain resulted from new construction and property sales, since transactions trigger reassessments to a property’s market price under Proposition 13. New construction also is assessed at its actual market value.
“Low inventories pushed home prices to record highs as fiscal 2017 ended,” Riverside County Assessor-County Clerk-Recorder Peter Aldana said in a news release earlier this summer. “Rising employment drove vacancy rates down, and rents up in the commercial office market. New industrial construction grew as the logistics sector demanded more warehouse space.”
Fastest Rising County
Tax assessments are rising fastest in San Bernardino County, which saw tax assessments jump 7.3 percent to nearly $222 billion, the local assessor’s office reported. Los Angeles County ranked second with taxable property values up 6.6 percent to more than $1.5 trillion.
Assessments rose by just over 6.2 percent in Orange and Riverside counties, with total property values pegged at nearly $593 billion in Orange County and just over $286 billion in Riverside County.
Those gains mirror what’s happened in the local housing market.
San Bernardino County, which has the region’s most affordable housing, had Southern California’s biggest home price gains in the past year, with increases averaging 9.4 percent, CoreLogic figures show. At 8.2 percent, Los Angeles County’s average price gains were the second highest in the region.
Assessments were up in all 174 cities in Los Angeles, Orange, Riverside and San Bernardino counties.
San Bernardino County cities likewise dominated in tax assessment gains. Five of the 10 Southern California cities with the biggest assessment gains were from San Bernardino County. They included Rialto (up 15.7 percent), Needles (up 13.5 percent) and Fontana (up 11 percent).
Los Angeles County’s biggest assessment gains occurred in the city of Industry (up 12.1 percent), with Inglewood and Lynwood both seeing assessments rise about 10 percent from year-ago levels.
Meanwhile, a back-of-the-envelope calculation shows property tax hikes should be manageable for most homeowners.
For example, a homeowner who paid around $348,000 to buy a home in 2008 (the Southern California median price that year) likely will see the “base” tax increase $77 this year, to just over $3,900, after getting a $7,000 homeowner’s exemption. Were it not for Proposition 13’s cap on assessment hikes, this year’s base tax would be closer to $5,000 for that median-priced home.
There are other assessments on top of the base tax, but those vary from one area to another.
Source: OC Register