Contra Costa County Property Tax

Contra Costa County is a large, mostly suburban county in the East Bay of the San Francisco Bay Area in California. The rolling, oak-studded hills around Mount Diablo are home to over 1 million residents, many of whom may commute to the economic urban hubs of San Francisco and Oakland. If you’re considering purchasing property in the area, it’s important to learn about Contra Costa County property taxes.

4 Things Investors and Homeowners Need to Know About Contra Costa County Property Tax

1. How Property Taxes Are Calculated in Contra Costa County
2. Property Tax Rates for Contra Costa County
3. How to Pay Your Contra Costa County Property Taxes
4. How to Lower Your Tax Liability

The Bay Area is one of the most desirable locations for real estate in the entire country. While the cost of living in San Francisco is high, there are almost 40 different cities and districts in Contra Costa County. The difference between these areas is sometimes significant, and property owners in one district will not have the same tax bill as property owners in another district.

1. How Property Taxes Are Calculated in Contra Costa County

In Contra Costa County, exact tax rates may vary from area to area, and even from parcel to parcel—generally, the assessed value of your property is multiplied by 1% to get the ad valorem tax rate. Taxes from general obligation bonds are added to this amount, though these may change from year to year.

Under Proposition 13, real property in California is assessed for tax purposes after it changes hands or been subject to improvement (like new construction). Other than that, the value of a property for tax assessment cannot increase more than 2% each year. This is why the assessed value of your home may not be the same as its selling price.

If a portion of your real property is undeveloped land, you may actually be able to score a special arrangement with Contra Costa County under The California Land Conservation Act of 1965, also called the Williamson Act. If you make a contract agreement to preserve the land for 10 years, your taxes will be based on whichever is the lowest of the three: (1) base year property value, (2) market value, or (3) agricultural value.

If you make improvements to your property, that will trigger a reassessment, and most likely an additional supplemental tax bill, which is only applicable for the year in which you did the improvement.

2. Property Tax Rates for Contra Costa County

The exact property tax rates will vary from area to area because voter-approved bonds are added to the 1% ad valorem tax. However, according to Auditor-Controller, tax rates generally end up being around 1.1% of the property’s value.

There are nearly 40 cities and districts in Contra Costa County, and property tax rates can vary greatly. For example, the median home price in Walnut Creek is currently is $871,000, while homes in Bay Point or the City of Richmond are less than half that amount. This means property owners with real estate near the much-coveted Walnut Creek may pay $8,710 in property taxes, while the owner of a property in the less-desirable, more industrial Bay Point will pay around $4,000—a sizeable difference. Of course, these property tax revenues fund basic public necessities like police protection and the local unified school district in your area.

Additional voter-approved bonds you’ll have to pay are listed on your tax bill and on the yearly Detail of Tax Rates published by the Auditor-Controller. Voter-approved bonds tend to fund special projects in infrastructure, transportation, schools, and open space—costs that most taxpayers find worth paying. These unique additions to your tax bill are a good reason to keep abreast of the local governments, the upcoming ballot, and discussions led by the board of supervisors in your city.

Town meetings throughout Contra Costa County are generally open to the public, and the county board of supervisors is very transparent about the budget developed from tax revenues. If you’re curious about what Contra Costa County does with property tax revenues, they are allocated as follows:

• 48% goes to schools
• 20% goes to special districts
• 13% goes to the county
• 11% goes to redevelopment
• 8% goes to cities

3. How to Pay Your Contra Costa County Property Taxes

Tax bills are mailed to the owner of the property and become payable on November 1st. Whoever is listed as the owner as of January 1st will receive the tax bill and is responsible for payment, whether or not they received the bill. If the property changed hands since the first of the fiscal year, the Tax Collector will not know until either (1) they are notified or (2) the tax roll comes out the following year.

There is actually a San Francisco mailing address on your tax bill, and that’s where the bill should be sent for payment—directly to a lockbox in the county’s depository bank. Do not send your payment to the Tax Collector’s office in Martinez. The tax bill can also be paid online, over the phone (925-957-5280), in person at the Finance Building (625 Court St, Room 100, Martinez, CA 94553). Take note that credit card payments will be subject to a convenience fee of 2.5% percent, so if your property is in Walnut Creek, that will cost you over $200.

Payment for property taxes can be made in two installments. The first payment is due on December 10th, and the second payment is due any time between February 1st and April 10th. If you don’t pay your property taxes on time, there will be penalties and fees in addition to the payment still owed. However, Contra Costa County has a unique five-year repayment program for defaulted tax bills. Note, however, that while the five-year repayment plan is underway, you will still have to make payments on your current property taxes.

4. How to Lower Your Tax Liability

Lowering your tax liability is what every player in the real estate game wants to know—especially in an area like Contra Costa County, where even the less-desirable parts of the county have homes that are more than double the national average in terms of mean property value.

Thankfully, there are a few ways to lower your tax liability.

One easy way is to invest in multi-family housing. While a single-family home may be valued at more than 1 million dollars, you’re only going to get one rental check out of that—while still having to pay $10,000 or more in taxes every year. Why not acquire a million-dollar property with 4 or more units in order to hedge your liabilities? Of course, you’ll want to make sure you thoroughly understand landlord-tenant law.

If you feel your property has been incorrectly assessed, you can appeal to the Assessment Appeals Board in the office of the Assessment Appeals Clerk, which is a totally separate entity from the Assessor’s Office. You can reach the Clerk’s office by calling 925-335-1920. The application to dispute the assessor’s valuation of your home requires a $40 fee and must be filed between July 2nd and November 30th. If new construction triggers a supplemental assessment of your home, you must contest it within 60 days.

Property tax strategy can also be a component of your overall retirement plan. If you’re 55 and older, you can move and transfer the value of your old home to your new residence. Unfortunately, Contra Costa County does not accept transfers from other counties, so you would only be able to use this strategy if both your old home and your new home are in Contra Costa County.

Builders can actually file for a special tax exemption from special assessments as long as they intend to resell the property they’ve developed. All they need to do is file for a Builder’s Exclusion. Even better, if the builder has a subdivision of five lots or more, the extension is automatically granted. While this strategy will not help homeowners who intend to continue residing in their property, it is particularly useful for those involved in development. The county suggests you file for the extension as soon as the land has been purchased. Call 925-313-7400 for more information. Though developers often feel that filing anything beyond basic permits is an extra headache, they should not forego this chance to save money (though, as mentioned, if the parcel is further subdivided into five lots, the exclusion will be granted automatically).

There are also special tax and assessment exemptions for nonprofits, religious institutions, and even homeowners who live in their property (as opposed to renting it out). For example, a homeowner residing in the property may be eligible for a homeowner’s exemption on their supplemental tax bill (the bill triggered by a reassessment after home improvement). Contact the Assessor’s Office to see how much you could save.

One way to leverage this strategy for those who live in a multifamily housing unit would be to improve one of the other units and increase the rent while retaining the advantage of a special assessment exemption that is normally only available to homeowners.

Another strategy you could leverage is paying your tax bill all at once and listing it as an expense against your income. While it’s nice to be able to pay your taxes in two installments, paying it earlier in that one lump sum could save you a decent chunk of money when you file your income tax.

In many counties, keeping the property within your family can help you avoid certain taxes and fees during the sale, like transfer tax and recording the deed of trust. Additionally, transfers of ownership between spouses do not trigger an assessment. The Tax Collector’s website does not list all the exceptions to the rule of a sale triggering an assessment, so call them directly to ask what types of transfers and sales do not trigger a reassessment in Contra Costa County before relying on this strategy.

How Does Contra Costa County Compare to Other Cities in California and the United States?

Some parts of Contra Costa County see abnormally high property taxes, especially in comparison to the national average of $2,279 annually. Potential investors might be wondering why property taxes in Contra Costa County are so high, but even a little light research will uncover the reasons.

While the cost of living in San Francisco is high, those price tags have spread out to other parts of the immediate Bay Area as well (counties like Marin, Alameda, and Santa Clara). Even everyday living in Contra Costa County is more expensive—as one indicator, while the sales tax rate in California is 6%, sales tax in Contra Costa County is 8.25%. This 2.25% difference is a good indicator of the quality of the infrastructure, the school district, and public utilities that are funded by tax revenue in your neighborhood. There’s a reason why some areas of the county have seven-figure home prices.

Dozens of tech giants are sprinkled around the Bay, from Google to Facebook to Twitter to Uber, and many of the employees at these companies earn higher salaries than the national average. While this creates a potentially lucrative market for renters, the younger workforce may be reluctant to rent or buy a home, leaving multi-family housing as a still-attractive option for investors.

While certain counties in the Bay Area tend to be more homogenous in terms of home prices, counties in the East Bay have a wide range of values and property taxes. As mentioned, homes near Walnut Creek may be liable for an $8,000-$10,000 tax bill, while homes in other areas could be liable for half that amount, and homes in other areas like Pleasant Hill will be somewhere in-between (with home values at almost $800,000). Your best bet is to consult with an experienced realtor in the area who knows the area well and can direct you to the best value.

With high resale values, acquiring foreclosed properties as a house flipping strategy could also yield beneficial returns. Of course, whether you’re renting or flipping, you want to set up an LLC to make sure your personal assets are protected from indemnity.

Contra Costa County Property Tax

We hope this article has given you a solid overview of Contra Costa County property taxes, how they’re calculated, paid, and what you can do to reduce your tax liability. In addition to some of the strategies we’ve outlined above, the experienced tax and legal professionals at Anderson Advisors can provide competent guidance about real estate taxes, and help with complex strategies like trusts and setting up an LLC. These strategies can be used to minimize your liability and reduce property tax payments—something that is of great importance in an area as expensive as Contra Costa County.