The monthly payment on your mortgage loan isn’t the only cost you have to worry about after buying Los Altos homes for sale. Paying property taxes is a big part of homeownership. With property taxes varying across the nation, knowing your exact county tax rates is the only way to return your taxes correctly. Otherwise, you might end up doing them all wrong.
Follow this expert guide from the Campi Group to ensure you know what you’re getting into. Read on to understand Los Altos property taxes from start to finish.
What is property tax?
Property tax, also called real estate tax, is a type of tax levied by the state and local municipalities. It is a tax that property owners must pay within their locality. Property taxes help to fund services within the community, such as the police and fire departments, garbage services, road maintenance, and school programs. Because property taxes are regional, they will vary from place to place, and they also fluctuate semiannually. In Santa Clara County, the average county tax rate is 0.72%, which is lower than the national average of 1.1%.
If you choose not to pay your property taxes, they can and will be collected by the local authorities or the state before you’re allowed to sell your property.
How are property taxes calculated?
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When you purchase a home, you get an official appraisal assessing that home's value. Once you have an assessment number, you multiply it by the local county tax rate. In Santa Clara County, that number is 0.72%. That means if you had a million-dollar home, you would pay $7,200 in property taxes annually. For houses in Los Altos, you can use the Santa Clara County property tax calculator to estimate how much you’ll owe annually in property taxes based on your home’s assessed value. Because property tax differs across the country, every county will have a different calculating tool.
After the 2020-2021 housing boom, you might worry that your California property tax could rapidly spike because your home value increased exponentially. If your million-dollar home became a two-million-dollar home, that could double your property taxes, right? Fortunately, that’s not the case. The 1978 California Proposition 13 states that California home values are only allowed to go up 2% each year as it applies to property tax calculations.
Propositions like Prop 13 are why so many long-time California home buyers have much lower property taxes than what their home is worth. However, the second they sell, the new buyer does not get to keep that low tax rate. If you buy Los Altos homes for sale in 2022, you will pay 2022 assessment prices.
What is property tax used for?
Property taxes exist on a state and local level because they help pay for city services like schools, new developments, fire departments, and road maintenance. If you live in one of the houses in Los Altos, your property taxes help improve the community. If you want to know the specific stats regarding the use of Santa Clara County property taxes, they go to a variety of programs:
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K-12 education (44%)
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The county (18%)
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Different cities in the county (14%)
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Redevelopment (11%)
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Community colleges (7%)
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Special districts (6%)
Also, if there are any local natural disasters, money from this fund is used to help assist residents needing disaster relief.
When to pay taxes
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You pay for your annual property taxes in two installment periods, making your taxes a bit more bi-annual than truly annual.
Let’s break it down: The fiscal year starts on July 1st. The first half of your property taxes are due by November 1st. Using that million-dollar home example from before, that means you pay $3,900 at or before this date.
After December 10th, though, any unpaid taxes will be considered delinquent. You don't want to do that because delinquent taxes come with interest rate penalties that stack the more times you pay your taxes late.
The second installment is due by February 1st and delinquent by April 10th. Despite the second date being close to private income tax season, don’t mistake them for one another. Submitting your property taxes on April 18th could cost you hundreds of dollars.
When you're ready to pay your property taxes, you send your money or checks to the Department of Tax and Collections. There are three ways to submit: online, mail, or in-person. Online, you pay with a credit card, as long as your credit limit allows the size of your property tax payment. If you want to mail your property taxes, use the Santa Clara County info site and follow the directions. With their tips, you can address and mail out your taxes directly.
Otherwise, you can get an appointment at the County Government Center in San Jose and submit your taxes in person.
Tax deductions
There are some perks to paying property taxes. If you itemize your tax returns, you can deduct the property taxes paid on your home or any other real estate you own. In a way, buying Los Altos homes for sale can save you money. However, check the local tax law every year if you do this. Depending on where you live, the amount you can deduct will change because of certain lawful limits.
Contact an accountant
If everything above sounds like an unnecessary headache, working with an accountant who is familiar with property taxes in the area is a good idea. This will help you focus on the excitement of buying and living in one of the beautiful houses in Los Altos and let a professional deal with the hassle of taxes. Need suggestions for good local accountants? Ask your real estate agent for recommendations.
Have more questions about property taxes and how they apply to Los Altos homes for sale you’re interested in? Reach out to one of the experienced local agents at the Campi Group for expert guidance and to answer all your questions.
*Header photo courtesy of Pexels
*Header photo courtesy of Pexels
