Reviewed by: Brandon Brown
California is among the top ten states for average property tax cost. However, the amount you’ll pay in personal property tax depends on where you live.
Tax rates vary by county, and Los Angeles County real estate taxes can differ between specific L.A. County neighborhoods.
Homeowners and prospective buyers alike need to understand not just the current property tax rate, but the propositions and specific county methods of calculating property tax.
Let’s take a look at how Los Angeles real estate taxes are calculated and potential ways to reduce your costs.
California Property Tax
If you are researching where to buy in Los Angeles considering tax rate, keep in mind that California property tax is an ad valorem tax, which means the tax amount is based on the assessed value of the item being taxed. The starting point is a 1% statewide tax levy before additions by more localized tax bodies, although the effective property tax rate (what people are actually paying) is 0.74% in California.1
What keeps California property tax rates from skyrocketing is Proposition 13, a constitutional article passed in 1978 that:2
- Limits statewide property taxes to 1% of the assessed value
- Only changes assessed value when the property is sold or undergoes major construction
- Restricts any increase in assessed value to no more than 2% each year
The major benefits go to homeowners who stay put, but this law also helps new buyers who might otherwise be faced with a significantly higher tax rate.3 Prior to passing Prop 13, state property tax rates averaged 3%, and there was no limit on annual assessments—every time a neighboring house sold, homeowners were hit with tax increases so big that some people lost their homes.4
Los Angeles Real Estate Tax
So, what are real property taxes in Los Angeles? And how much is a house in LA after factoring in these taxes? Though house prices vary greatly and are dependent on a handful of factors, it is important to note that cities and local municipalities in California can apply property tax in addition to the statewide 1%. These rates are submitted by the county auditor-controller and may be voter-approved.
The L.A. County tax website will provide actual taxes for a specific real estate parcel by address. This will include:
- State tax – 1% of assessed value.
- School district tax – The next largest levy is from school districts, generally between 0.16% and 0.2%.
- City tax – The city of Los Angeles imposes an additional levy, generally between 0.02% and 0.03%.
- Water district tax – Los Angeles is serviced by the Metropolitan Water District at a rate of 0.0035%, which has been stable since 2012.
In the six years before the pandemic, both city and school district tax rates underwent a slight decline in L.A., so a buyer needn’t assume they’re always on the rise. Based on analysis of the Los Angeles real estate trends in 2020, Zillow showed a property tax levy total for the city of Los Angeles homes ranging from 1.22% to 1.42%.5
Can You Save on Your Real Estate Taxes?
There are multiple ways to reduce or regulate L.A. property tax. All homeowners have access to:
- Exemption – All homeowners receive a $7,000 reduction in the assessed value of their principal residence. New owners need to file by February 15 to receive the full value; if filing between February 15 and December 10, they’ll get 80% (or $5,600) of the reduction. The exemption will remain in effect until the property is sold.6
- Appeal – Property owners have the right to appeal (and re-appeal) the tax amount and request a reassessment of their home. Contact the Los Angeles County Tax Assessor’s office.
- Federal tax deduction – If you itemize deductions, you should be able to deduct 100% of your Los Angeles County property taxes.
- State tax deduction – You may be able to deduct part or all of your property tax from your California return.
Special Circumstances Savings on Real Estate Taxes
Additionally, there are special-case propositions and regulations that allow for property tax reductions or limits for some people. These include:
- Inheritance transfer – Unlike a regular sale, if you transfer real estate to your child or grandchild through an estate transaction or trust, you can apply to maintain the tax basis to avoid a tax increase based on a new market value assessment.
- Decline-in-value exemption – Under Proposition 8, if market changes create a drop below the current base value, you can receive a temporary reduction in assessed value and thus lower taxes in a given year.
- Elderly relocation – Seniors over 55 can keep their current property tax basis if they move to a property with an equal or lower market value.
- Disability relocation – Those with severe and permanent disabilities can keep their current property tax basis if they move to a property with an equal or lower market value, including a move between participating counties.
- Disaster relief – If your property has more than $10,000 in damage from fire, flood, or earthquake, you can receive a temporary reduction in assessed value and thus lower taxes in a given year.
- Green energy – If you install solar energy systems, you can take advantage of a green energy exclusion.
- Veterans – You can subtract up to an additional $4,000 from your assessed property value if you have limited assets (under $5,000 single / $10,000 married). An additional exemption is available for some veterans with disabilities and their surviving spouses.
Ready to Put a Los Angeles Property on the Market?
Selling a house is a headache-inducing process that comes with a mile-long checklist of tasks and concerns. In addition to repairs, renovations, staging, and more, you’re bound to have prospective buyers who ask, what is property tax in los angeles?
If you’re ready to move on and looking for a stress-free option, FlipSplit can help. We buy houses in any condition, take on all renovations needed, and split extra profits with you!
Whether your home is walk-in ready or you’ve got a property that’s unsafe to enter, we can handle it. FlipSplit pays you fair market value for the house as is, plus cuts a second check to you if our skilled upgrades end in extra profit.
Visit FlipSplit to learn more or get started on an offer for your property today.
- Tax-Rates.org. California Property Taxes 2021. http://www.tax-rates.org/california/property-tax
- Santa Clara County Assessor’s Office. Understanding Proposition 13. https://www.sccassessor.org/index.php/faq/understanding-proposition-13
- National Bureau of Economic Research. The Lock-in Effect of California’s Proposition 13. https://www.nber.org/digest/apr05/lock-effect-californias-proposition-13
- Howard Jarvis Taxpayers Association 2021. What Do You Tell a New Neighbor About Prop. 13? https://www.hjta.org/propositions/proposition-13/what-do-you-tell-new-neighbor-about-proposition-13/
- Zillow. Los Angeles CA Real Estate & Homes For Sale. https://www.zillow.com/los-angeles-ca/
- B|O|S. California Homeowners’ Exemption vs. Homestead Exemption: What’s the Difference? https://www.bosinvest.com/blog/financial-planning/california-homeowners-exemption-vs-homestead-exemption-whats-the-difference/
Reviewed by: Brandon Brown
As a long-time Asset Manager, Investor, Real Estate Agent, and Broker/Owner of BayBrook Realty in Orange County, Brandon Brown is one of FlipSplit’s lead Real Estate experts. Having worked on over 2,000+ real estate transactions, Brandon brings a depth of knowledge that ensures clients are appropriately treated with honesty and integrity. His insights and advice have been published in numerous blogs beyond FlipSplit, and he keeps a close eye on market trends and statistics, which are updated weekly on his social media pages. Outside work, you can find him participating and serving at church, cycling, mountain biking, surfing around Orange County and beyond, and enjoying time with his wife and two daughters.