San Diego Property Tax

San Diego Property Tax – 5 Things Investors Need to Know

San Diego County is the second largest county in California. Residents of this county benefit from state laws that limit property taxes and how much they can increase each year. There are a number of factors that affect property taxes and trying to calculate what you owe and when to pay can be quite confusing. Here are some important facts about San Diego property taxes that homeowners and investors need to know.

San Diego Property Tax – 5 Things Investors and Homeowners Need to Know

  1. How San Diego Property Taxes Are Calculated
  2. San Diego County Property Tax Rates
  3. When San Diego County Property Taxes Are Due
  4. How to Pay San Diego Property Taxes
  5. Ways to Lower San Diego Property Tax Liability

San Diego County is the second largest county in California (only Los Angeles County is larger). There are over three million people living in San Diego County, which spans 18 cities, including the city of San Diego and Chula Vista. San Diego County boasts over 990,000 parcels of real estate on the county’s secured tax roll, with an assessed value of more than $490 billion. There are over 255 taxing agencies, 42 school districts, and five community colleges. In 2018 alone, the San Diego County Treasurer and Tax Collector gathered over $6 billion in property taxes. Most of this money is allocated to schools and education, as well as parks, emergency services, public transportation, and more.

It’s important for homeowners and investors to understand how their property taxes are calculated and when payments are due. Knowing these costs will allow you to develop a tax planning strategy that minimizes your liability.

1. How San Diego Property Taxes Are Calculated

Property taxes in San Diego County are comprised of a general tax levy applied across California. Real estate owners will also pay additional property tax based on where their land is located. Voter-approved bonds or indebtedness is also factored into property taxes. Schools and special districts can levy additional property taxes. Local governments and taxing agencies project their budgets and consider the assessed value of the property in their districts to determine the appropriate tax rates. A Community Facilities District (CFD), also known as a Mello-Roos District, can levy additional property taxes in their jurisdiction.

Sometimes, these taxing agencies may charge a direct assessment per property rather than a flat tax rate. Because of this, the tax rates change each year and can vary widely between properties. Your property tax bill will break down the components of the tax rate and direct assessments.

Proposition 13 sets the general tax levy to 1% of a property’s assessed value. The assessed value of a home is determined each year by the County Assessor. Proposition 13 also limits the amount that a property’s assessed value can increase; the increase is capped at 2% each year.

There are two main exceptions to this: when property changes ownership or when qualifying improvements are made. These two events can change the assessed value of a parcel of land which, in turn, can impact the property taxes due. Changes in ownership allow the assessor to revalue the house to the fair market value or to the purchase price that the new owner paid to purchase the real estate. Keep in mind: these changes in property value may change the amounts that both buyer and seller owe in property taxes. A supplemental tax bill is often sent out to the taxpayer in these cases to collect on the property tax difference for the new assessed value.

Secured property is property that is backed by physical and immovable property, such as real estate and permanent homes. Unsecured property, on the other hand, is mobile and also includes business property. The San Diego County Treasurer and Tax Collector will send a bill to collect both secured and unsecured property taxes for all local governments.

When negotiating to buy or sell a house, it is a great idea to discuss who will be responsible for paying which taxes. Sometimes, a buyer will have property taxes taken directly from the escrow account or factored into mortgage payments. Before making a purchase, always check public records to ensure there are no outstanding property taxes due (or similar issues). If there are, be sure to define who will pay these taxes and associated expenses. Depending on when the purchase occurs within the county’s fiscal year, the owner or the buyer may be responsible for paying the property tax — but the other party can prorate the amount they would owe in taxes and pass that along to the payer. Real estate investors who are planning to rent out their homes can benefit from real estate asset management services provided by a professional firm. Consider discussing your situation with a knowledgeable and experienced tax attorney to determine your best options.

2. San Diego County Property Tax Rates

Actual property or real estate tax rates will vary by location. To identify the exact property tax for a particular property, you can look up the parcel information on the County Treasurer’s website. You can also ask local real estate agents or even a tax attorney for this information. Tax rates for property taxes include the general tax levy applied across California at a base rate of 1%. Voter-approved bonds can also be reflected on your real estate tax bill. Local governments and tax authorities — such as schools and special districts — can also levy property taxes.

School districts can apply additional tax rates to the general tax. For example, in 2017-2018, Solana Beach school district applied a property tax rate of 0.03093 to fund an elementary school, a rate of 0.02229 to fund a high school, and a rate of 0.01443 to fund a community college, for a total tax rate of 0.06765. This tax was applied in addition to other property taxes and direct assessments which comprise the final property tax bill.

Cities and other local governments can also add voter-approved bonds. For example, those with property in Tax Rate Area (TRA) 008001 may be assessed an additional 0.00500 tax rate for maintenance of the San Diego Zoo. In 2018, San Diego City real estate owners paid a total tax rate of 1.17461, while property owners in Chula Vista paid a tax rate of 1.14221.

San Diego Property Tax – 5 Things Investors Need to Know

3. When San Diego County Property Taxes Are Due

The fiscal year begins on July 1st, and property taxes are due in two installments on November 1st and February 1st. Secured property tax bills are mailed between September and October, but be aware that property owners are expected to know and pay their property tax bill even if they do not receive it via mail.

The first installment is considered late if not made by December 10th. The second installment is delinquent if not paid by April 10th. A 10% penalty is applied to delinquent payments as well as an additional $10 charge for missing the second installment’s due date.

Delinquent notices are mailed in May and, if no action is taken, additional penalties and fees will apply. Delinquent accounts can accrue penalties of 1.5% each month, up to 18% per year, plus a $33 redemption fee. Taxes for prior years or defaulted taxes can exist on property that is being sold or bought. Real estate investors and homebuyers should carefully check the property to ensure that there are no outstanding taxes. Real estate investors looking to buy property in San Diego County can also benefit from money-saving capital gains tax strategies.

Supplemental tax bills will be sent out as they are assessed by the County, which may take over a year. A due date will be specified, and it is the real estate owner’s responsibility to pay this bill on time.

4. How to Pay San Diego Property Taxes

There are many ways to pay property taxes or real estate taxes in San Diego County. First, you can go on the County’s Treasury website to make payments online via e-check. This service uses the Automated Clearing House (ACH) network, which allows you to submit a near-instant check from your bank (returned check fees apply). Taxpayers can also pay using a debit card or credit card; however, a 2.19% convenience fee is added to credit card payments. Actual checks or money orders can also be mailed to this address:

San Diego County Treasurer-Tax Collector
ATTN: Financial Division / SRM Processor
1600 Pacific Highway, Room 162
San Diego, CA 92101

Be sure to verify this address before sending your payment. San Diego County requires payments to be postmarked before the delinquent dates. Some bank payment services can take several days to process your payment request, so be sure to plan accordingly.

5. Ways to Lower San Diego Property Tax Liability

With the right tax planning, there are ways to lower your San Diego property tax liability. One way to lower your property tax liability is to lower the value of the property. You may qualify for Homeowners’ Exemption, which can reduce the assessed value by $7,000. If the value of your property drops due to market conditions, you can also attempt to have the property value reassessed by an independent appraiser. Parents who want to pass property to children, or grandparents passing property to grandchildren, can benefit from exclusions which allow the original value of the home to stay the same although ownership is changing.

In cases of disaster or damage, you can contact the County Assessor and file the appropriate paperwork. Beware that this is a temporary reduction and can result in a slightly higher tax bill afterward. There are also exemptions available for veterans and disabled veterans, as well as those who are seriously disabled without veteran status. For more information, consult with a tax professional to ensure you are eligible for a deduction and be sure to promptly file the correct paperwork with the right taxing authorities.

When the County Assessor determines the annual value of a parcel, there is a short 60-day window in which the property owner can contest the value and appeal the decision. Regardless of how long the appeal process takes, ensure you pay the property tax bill on time to avoid late payment penalties.

Another option for real estate investors is to transfer their primary residence from a property in one county to a property in a different county. In certain qualifying situations, you may be able to move the current assessed value of the old property to the new property. Those who rent out multi-unit homes may be able to reap benefits from classifying the property as a primary residence if they also live in one of the units for a certain period of time. In order to reach the best tax savings, talk with a local professional tax lawyer who is familiar with the taxes in the area.

San Diego Property Tax – 5 Things Investors Need to Know

San Diego County Real Estate Taxes

San Diego County is the second largest county in California and generates over $6 billion in property tax revenue each year. These taxes go to fund important improvements, schools, and other services across the county. Calculating property tax rates is a complicated process. The tax rates begin with the general 1% tax levy applied across California. Next, voter-approved debt, schools, and special districts like Mello-Roos Community Facilities Districts can all apply their own tax, which is added to the tax rate.

In some cases, tax authorities may add direct assessments rather than a tax rate. Both will be on the final property tax bill, sent by the Tax Collector’s office during September and October. Property that has a change in ownership will most likely trigger supplemental property tax bills. Real estate tax rates vary by location, and you can use the San Diego County Tax Collector-Treasurer’s website to find out the exact property tax rate for any given parcel of land.

Your property tax payment will be due in two installments. The first is due in November, and the second is due in February. Payments that are late or not postmarked on time will accrue additional fees and penalties. You can pay your San Diego County property taxes online, with a credit card and debit card, by mail, or even in person.

In some cases, you can even lower your property taxes. This is done by filing requests for exemptions, exclusions, or temporary reductions in property value. For more information on real estate asset management and strategic tax planning, reach out to the professionals at Anderson Advisors today.

3 Steps to Create an Invisible Investor Strategy

The greatest mistake that people make when it comes to asset protection for real estate is not understanding the risks that are waiting out there for them. This eBook reveals the structure you should follow to ensure your hard earned money is protected from frivolous lawsuits and costly tax mistakes.San Diego Property Tax – 5 Things Investors Need to Know