Property Tax FAQS
What is your property taxes value based on?
Per prop 13 your property taxes are based on the original purchase price of the home (as long as that price is accepted by the assessor's office - which they almost always accept if it was an open market transaction). That value is then multiplied by the tax rate of that given year to give you your property taxes for the fiscal year. (You get to hold your purchase price value for one full tax year.) The county then adds special charges and direct assessment charges to the tax bill which are divided up by the number of units in your TIC. Each year (per Prop 13) the state releases the CPI index which increases (or decreases) the assessed value of the property. Under Prop 13 this can be no more than 2%. So the next full tax year the county will take your purchase price and multiply it against the CPI index to come up with a new assessed value which is then multiplied by the tax rate of that year. The tax rate (again per prop 13) is locked at 1% but changes from county to county based on bond measures etc.
What is a supplemental bill?
In addition to paying the regular secured tax bill, new homeowners will also receive a supplemental tax bill(s) and possibly Escape tax bill(s). These are one-time tax assessments designed to capture the value differences between the value currently on the assessment roll before your purchase and your purchase price.
Per your TIC agreement, we collect funds from the new owner at the correct rate from the time of purchase. The two exceptions to this would be if there was an improvement assessment (eg - new bathroom) or the assessor did not accept the purchase price as the true market value. In those cases, the supplemental bill would need to be billed directly to the owner responsible.
Why does my property taxes change every November?
Each year CA releases a CPI index that increases (normally) or decreases your taxable assessed value. Per prop 13 in California, this can be no more than 2%. In the middle of October, each county releases its tax bills with its tax rate (1% for the State of California plus local taxes and direct charges). We then recalculate each owner's taxes with the new information and update your amounts for the November invoice. Please note that you keep your first year assessed value for one full tax year and then CPI adjustments will be made. Please also check out this video for more information.
Why do TICs collect taxes monthly?
We highly recommend that you collect monthly each co-tenant's share based on their indexed purchase price plus any improvement assessments. This way the money will be available to pay each bill in a timely fashion from the accumulated funds (unless the Assessor makes an assessment error). It really doesn't work to try to figure out on a per-bill basis who owes what, especially when a large over-assessment is involved.