Finding Out the Cost of Property Taxes on Your Home in California

Of the four components that make up a monthly housing payment - principal, interest, taxes, and insurance - "taxes", as in property taxes, are most often overlooked. Yet, they should be easy to remember, thanks to the industry standard "PITI" - principal, interest, taxes, and insurance - which all go into a home buyer's monthly payment. (The abbreviation is pronounced, "pity", as in pity the homebuyers who forget to include property taxes in their calculations.)

Real estate agent Tom Lyons, based in Pleasanton, says that, "Buyers are not always considering property taxes," even if they have purchased a home before. "If you're buying a home that is $600,000 or $800,000 . . . that works out to a sizable amount of money."

In order to prevent any last-minute panic, Lyons walks through all four components of PITI for the buyers he represents. "At certain levels, I give them exactly what their entire payment would be - all four components, broken down, and the total. Because principal and interest are only about 65% of the total payment."

Nor do home buyers stop being surprised once they account for property taxes in their total payment. "Prop 13 sets the rate, but you have 1915 Special Assessment Districts and Mello-Roos assessments that will increase that rate," explains real estate agent Todd Ensley. "While the rate is really about 1%, in Oakland, it is often closer to 1.3%, because of the special assessments."

Mello-Roos refers to legislation that allows local governments to tack on additional taxes, provided they are approved by at least two thirds of the voters. Nor are they the sole province of cities. Counties, school districts, and other local government entities can request such funds be levied (by placing them on the ballot).

This means that, although counties in California send tax bills, other local entities can assess additional property taxes. So individual homes in the same city or area could have very different property tax obligations.