02 What you need to know
How Prop 13 sets property taxes after a purchase
Proposition 13, passed in 1978, set the basic property tax rate at 1% of a home’s assessed value, the value the county taxes you on.
When a home changes ownership, it’s reassessed. The new assessed value, called the base year value, is generally the market value at the time of the sale, which for a typical purchase is close to the price you paid.
After that, the assessed value can rise with inflation each year, but by no more than 2%. That’s why a long-time owner’s taxable value can be far below today’s market price.
What’s on top of the 1%
- Voter-approved debt. Local bonds for schools, cities and other agencies add a percentage to the 1% base. These vary by tax rate area, the small district your parcel sits in.
- Direct assessments. Flat charges for things like sewer, lighting, landscaping or parcel taxes. They don’t depend on your purchase price.
- Mello-Roos. Community Facilities District (CFD) charges, often found in newer developments, can add significantly to the bill.
Across LA County, many total ad valorem rates (the percentage-based part) land somewhat above 1%, often in the neighborhood of 1.1% to 1.3%. Some areas, especially newer communities with Mello-Roos, can be noticeably higher once fixed charges are added.
03 Real-world example
Estimating property taxes on a $1,000,000 LA home
You buy a home for $1,000,000. The seller bought decades ago, and after years of 2%-capped increases, their assessed value is about $350,000.
| Assessed value | × illustrative 1.25% | Per month | |
|---|---|---|---|
| Seller (long-time owner) | $350,000 | $4,375 | $364.58 |
| You (new buyer) | $1,000,000 | $12,500 | $1,041.67 |
| Difference | $650,000 | $8,125 | $677.08 |
If you budgeted from the seller’s bill, you’d be off by more than $670 a month before any direct assessments.
Assumptions: 1.25% is an illustrative estimate, not a universal LA rate. Your rate depends on your tax rate area. Excludes direct assessments, Mello-Roos and the homeowners’ exemption. Seller’s assessed value is hypothetical.
04 What most people overlook
What buyers overlook when estimating property taxes
- The listing’s tax figure is usually the seller’s bill. Treat it as a source for direct assessments, not as your tax.
- Fixed charges matter. The prior bill shows direct assessments and any Mello-Roos line items. Those generally carry over to you at roughly the same amount.
- Two budget items, not one. Your new taxes reach your regular annual bill over time, and in the meantime a supplemental tax bill collects the difference.
- Your lender qualifies you on your taxes, not the seller’s. Underestimating taxes can change how much home you qualify for.
- 55 or older? You may be able to bring your current taxable value with you under Prop 19.
Estimate taxes from your price times your area’s actual rate, then add the fixed charges from the current bill.
05 How I’d approach it
How I’d estimate property taxes before you make an offer
I never budget off the seller’s tax bill. I budget off your price.
I start with your offer price and look up the property’s tax rate area, so the percentage reflects that parcel instead of a countywide guess.
- Pull the current bill from the LA County property tax portal and note every direct assessment and Mello-Roos charge.
- Multiply your price by the area’s total ad valorem rate, then add the fixed charges.
- Divide by 12 and drop it into the mortgage payment calculator with your loan and insurance.
- Estimate the supplemental bill and set that cash aside after closing.
If the number surprises you, it’s far better to learn it before you’re in contract.