Navigating Orange County Real Estate Taxes: 3 Things You Should Know

Navigating Orange County Real Estate Taxes: 3 Things You Should Know

Reviewed by: Brandon Brown

A home is both a comfortable place to lay your head and a reliable place to invest your money. But while there are many benefits associated with homeownership, there are downsides too—namely, taxes. 

Orange County homeowners enjoy relatively low taxes thanks to a 1978 California law, Proposition 13, which restricts local officials from assessing taxes of more than 1% of your home’s market value. This law also caps annual assessed value increases at 2%.1 

But what can you expect to pay in Orange County real estate taxes (a term we’ll use interchangeably with “property taxes”)? In this short guide, we’ll cover the 3 most important things to know about taxes in the OC.   

#1 Taxes Vary By City and Neighborhood

As a result of this enormously-popular Proposition 13, the average property tax rate in California is now just .74%, ranking 33rd out of the 50 states.

To put that in perspective, before Proposition 13 was passed, the average property tax rate in the state was 2.67%, almost four times what it is today.

On the other hand, the actual annual tax bill owed by California personal property owners is much higher than the national average because homes here are among the most expensive in the United States.

How much can you expect to pay?

Laguna Beach is the city in Orange County with the lowest personal property tax rate at 0.46%, whereas Ladera Ranch has the highest index at 1.22%. 

  • That means a Laguna Beach homeowner in the median range might expect to pay $7,821 in annual property taxes, while their peer in Ladera Ranch would pay closer to $9,983 for their less expensive home. 
  • Seeing these percentages, you must assume that the cost of a home in Laguna Beach is significantly more than it is in Ladera Ranch. That’s not the case. The median home value in Laguna Beach is $1,700,400, while it clocks in at  $818,300 in Ladera Ranch.2 

Other cities that approximate the 1% mark include Las Flores (0.96%) and Rancho Santa Margarita (0.90%). The Orange County home prices for these areas are $779,600 and $652,400, respectively.

At 0.50% and 0.56%, Los Alamitos and Newport Beach also boast property tax rates of lower than 0.60%. Their median home prices are $755,000 and $1,787,300 respectively.

#2 Taxes Aren’t All About Home Value

You’re probably wondering why the assessed property tax rate would be higher in a city with significantly lower median home values. 

Taxes depend on how the county allocates funds to certain areas, which may differ across even the best neighborhoods in Orange County.

Three factors that impact tax rates include: 

  • Expenditures for infrastructure and public services
  • Length of homeownership
  • Property classification as either secured or unsecured

What Is the Difference Between Secured and Unsecured Property Taxes?

Newport Beach, Orange County

The terms unsecured and secured have been thrown around quite a bit in discussing factors that impact property tax assessments. Let’s review the difference between the two. 

  • Secured properties are ones that the Orange County tax collector could seize and sell off to pay any unpaid property taxes that you might owe. They don’t necessarily need to be houses but can also be land. Generally, you would need to have equity built up in the property to qualify as secured property. 

If you have a mortgage, for example, then you must have paid off enough that its sale could cover the debt obligation of outstanding and delinquent taxes. As you may suspect, many homeowners who fall behind in paying their Orange County real property tax end up satisfying their delinquency once their house sells.3 

  • Unsecured property taxes generally apply to assets such as airplanes, boats, or mining rights. This concept can be applied to improvements made to homes in the real estate context. The Orange County Tax Collector will generally send a Notice of Intent to Enforce Collection letter to the asset’s owner, requesting payment within ten days.

The assessor can seize the property or place a lien against it if its owner does not pay the outstanding property taxes within that specified time frame. In the case of real estate, the assessor would be able to record a lien against the deed of the property that would have to be satisfied when the home is sold.4

The property tax rates tend to be higher on unsecured loans. 

#3 Tax Can Potentially be Deferred

Some homeowners  might wonder whether their Orange county real estate taxes might qualify as a write-off on their annual return.

One program allows these homeowners to delay paying their property taxes by a year, provided they can prove that:

  • Their home is their primary residence
  • They have built up 40% equity in it
  • Their annual income doesn’t exceed $45,000

Proposition 60 and 90 allow Orange County seniors to carry over the value of their home to another California city provided that their new home has an assessed value at or below their current one. 

Address Property Tax Burdens with FlipSplit

Although California has some of the lowest property tax rates in the country, those rates can still be burdensome. This may be the case if you’re on a fixed income or have recently undergone a life change like job loss or divorce.

The current state of the housing market in Orange County is favorable to sellers—but perhaps you’ve been deterred from listing your home because you don’t feel it’s up to par due to needed renovations and repairs. That’s where the professionals at FlipSplit can help. In short, we buy houses in Orange County and beyond.

Our company specializes in purchasing off-market properties. We make an offer to take your home off your hands at a fair market rate, make necessary improvements to ensure it nets the highest sales price possible, and then split the profits with you.

Get the ball rolling by requesting an offer. Seize your financial future today!

Sources: 

  1. SmartAsset. California Property Tax Calculator. www.smartasset.com/taxes/california-property-tax-calculator/
  2. SmartAsset. Orange County, CA Property Tax Calculator. www.smartasset.com/taxes/orange-county-california-property-tax-calculator/
  3. County of Orange. Secured Property Taxes. www.octreasurer.com/property-tax/secured-property-taxes/secured-property-taxes/
  4. County of Orange. Unsecured Property Taxes. www.octreasurer.com/property-tax/unsecured-property-taxes/unsecured-property-taxes/

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.

Ready to Flip Your Home?