Reviewed by: Brandon Brown
If you’ve attended the closing on a house, you know it’s mostly a celebration—of paperwork. There are mortgage papers, deeds, and a whole stack of legal documents to be reviewed, signed, and notarized.
One item you’ll need to keep an eye out for is property tax transfer. The contractual agreements in a real estate transaction should always specify the details of who pays what and when to ensure up-to-date property tax payments don’t fall through the cracks.
In this guide, we’ll go over the fine print of Riverside, CA real estate market taxes.
Who Pays Riverside Property Tax—Buyer or Seller?
In a seamless transfer, the seller would pay their final bill the day before the sale closes to cover through that date. The county would charge the buyer starting exactly from the closing date.
In the real world, the property tax transfer needs to be clarified based on actual payment and tax due dates. If the seller has prepaid property tax, that sum can be negotiated to change hands during the sale.
For instance, say Joe sells his home in any given Riverside neighborhood to Sue for $300,000 at the end of June, but back in January, he’d already paid property tax in Riverside of $2,400 for the calendar year. Sue owes Joe $1,200 to cover the amount of taxes he prepaid for the months that she will now own the house.
Will the Property Tax Increase After a Sale?
In California, property tax has a unique system that automatically triggers a change in assessed value at the time of most transfers of title, which in turn changes the amount of tax due. In addition, there may have been adjustments to the taxed amount based on the seller versus the property value. These can further contribute to an increase in property taxes for the buyer.
This all means that if Joe had kept his house, Riverside county would have considered his property tax paid in full for the year—but when Sue buys the property mid-year, she’ll have a higher tax rate to pay and thus will end up owing additional tax for the period Joe prepaid.
The difference between the seller’s and buyer’s taxable amount will be billed to the buyer in a supplemental property tax bill.
Property tax rate and amount due may increase based on:
#1 The California 1% Property Tax Mandate
Proposition 13, passed in 1978, mandates that all property in California starts with a basic 1% tax rate of assessed value.1 Property valuation is structured so that:
- When a property is sold, the sale price is used as its new assessed value
- The assessed value is raised 2% annually (or at the rate of inflation, whichever is lower)
There are some cases where the property value will remain as-is without a sale triggering a new assessed value. These protections are in place for:
- Buyers age 55 and over
- Disabled buyers
- Transfers between spouses, parents and children, and grandparents and grandchildren
- Property damaged by natural or environmental disasters
Unless a buyer’s situation is covered above—or they somehow hit the jackpot by purchasing a home at a price very close to what the previous homeowners paid—they can count on owing higher taxes than the seller did.
#2 Seller’s Property Tax Exemptions
While Proposition 13 starts the California property tax rate at 1%, there are also voter-approved taxes that add to that amount. But in reality, the median property tax in Riverside county is 0.8% due to exemptions that provide savings.2 These can be based on:
- Homeowner’s property tax exemption for housing occupied by the property owner
- Veteran’s exemption
- Church and welfare exemption
If the buyer happens to qualify for the same exemptions mix as the seller, they’ll still need to go through the process of applying for the exemptions before having their new tax rate reduced.
#3 Seller’s Property Tax Postponement
If the seller had applied to the State Controller’s Property Tax Postponement Program, property taxes may be overdue and secured by a lien on the property. Homeowners can apply for this program if both of the following apply:
- They are seniors, blind, or have a disability
- They fall under certain income and other requirements
In most cases, the seller deals with a lien by paying it out of the proceeds of the property sale. However, if they don’t have enough home equity to generate a profit, it may come down to a negotiation with the buyer to ensure the lien is paid off.
FlipSplit: An Easier Way to Sell Your Riverside CA Home
Figuring out your property tax breakdown is the tip of the iceberg with a typical home sale—your to-do list also includes cleaning, repairs, and improvements before showing your house. To get the best return from a buyer, property owners need to know how to invest in upgrades and staging that pays off.
There’s a new option for homeowners looking to sell now that will let you skip the hassle, avoid high real estate agent and appraisal fees, and still turn a profit on a Riverside property sale. At FlipSplit, we buy houses as they are, handle the A to Z process of maximizing their appeal and listing price, and split extra profits with you!
Find out more about how to sell your Riverside house fast today and get the ball rolling on an offer for your property.
- The Legislative Analyst’s Office (LAO). Understanding California’s Property Taxes. https://lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx
- TaxRates.org. Riverside County Property Tax Rate 2022. http://www.tax-rates.org/california/riverside_county_property_tax
- State of California – State Controller’s Office. Property Tax Postponement. https://www.sco.ca.gov/ardtax_prop_tax_postponement.html
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.