Every October, I cringe a little when I receive the bill for my property taxes. The bill is for the current fiscal year for my county, which runs from July 1 through June 30.
Keep in mind that I bought my house within the past 10 years. In Orange County, California. With Mello-Roos. It’s a nice chunk of change to pay the OC Tax Collector every December and April.
Growing up as the daughter of a frugal engineer, it’s in my DNA to try to find some savings whenever I can. Fortunately, there is some relief available to homeowners.
Here are three ways that you may be able to save money on your property taxes*:
1. FILE FOR A HOMEOWNERS’ EXEMPTION
If you own your home and occupy it as your principal place of residence on January 1 of a given year, you may apply for a Homeowners’ Exemption. This will exempt $7,000 of your home’s assessed value from taxation by the county. Once this exemption is filed with the county, you do not have to reapply each year as long as you continue to occupy the home as your principal place of residence, and no other document is filed with the county that changes how title is held on your property. NOTE: If you file with the county recorder to transfer title on your property to your living trust, you may need to reapply for this exemption. For more information about lowering your property taxes using the Homeowners’ Exemption in Orange County, visit the OC Tax Assessor’s website.
To check if the Homeowners’ Exemption is being applied to your property right now in Orange County, you can view my video tutorial on how to lookup your property tax detail for your Orange County home.
2. APPEAL YOUR PROPERTY VALUE
Once you receive your property tax bill, you may think that your property tax amount seems high. That tax amount is calculated based on the assessed value of the property. A higher assessed value means a higher property tax amount. If you believe your assessed value should be lower, you have the option to file a property tax assessment appeal with the county each year. You can do so through a formal appeals process that starts July 2 and ends November 30. For more information on formally appealing your property taxes in Orange County, visit the OC Tax Assessor website regarding appealing your property value.
You can also request for an informal appeal that starts January 2 through April 30. This review process occurs for the tax year BEFORE the bills are mailed out in October. In other words, you apply for this informal appeal before ever seeing what the actual billed property taxes are for the upcoming tax year. For more information about an informal appeals process in Orange County, visit the OC Tax Assessor website about requesting an informal property assessment review.
I have done both the formal and informal assessment appeals for my property taxes over the years. I attended a hearing as part of a formal appeal. Fortunately I was able to lower my assessed value for one particular year. It’s not rocket science, but it does require your time, as well as obtaining sales comparables on or near January 1 for a given tax year. If you need assistance in getting these sales comparables, feel free to contact me.
3. FILE FOR EXCLUSIONS FROM REAPPRAISAL
This one is a meaty subject. Basically, whenever real property is transferred between two different parties, that property is typically reappraised. Such reappraisal may adjust the property tax basis for the new property owner. This new property tax basis is usually an amount close to the sales price when involving an unrelated buyer and seller in an arm’s length transaction.
There are some circumstances when a person may be able to exclude their property from being reappraised upon transfer or sale. This may be advantageous for a person who had owned a property at a much lower property tax basis and then transferred or sold it to another party when the current market value is much higher.
You can obtain more information about these exclusions here:
While there is a lot of information for each of these ways to save money on your property taxes, filing for each of them is rather simple. The forms themselves are not very complex at all. You just need to understand each process before determining if and how to take advantage of these property tax savings.
* The information contained herein generally applies to properties located in Orange County, California. Similar tax savings tips may apply to other counties in California. Please check with your county tax assessor for specific details on whether any of these tax savings tips may apply to your property.