Like much of the state of California, Sacramento’s property tax structure was dramatically rewritten with the passage of Proposition 13 in 1978. From that point forward, all property already owned was to be essentially taxed at 1 percent of the last sale property value. A very mild inflation factor was allowed every year, but that increase on the tax amount could only rise by 3 percent the most. For years, this was the case for Sacramento until it began to grow again in the 1990’s.
Why Taxes Seem Higher in Sacramento
Sacramento today still has its standard property tax formula that is the same as any other county in the state. However, new neighborhoods have notably different treatment for special district assessments, Mello Roos fees, and homeowners’ association fees, all of which can be added on top of the base property tax. Special district assessments are charges and taxes that are levied on specific neighborhoods for a variety of specific purposes. For instance, some areas will have a charge for the construction of a new fire station. Others will have a landscaping assessment to maintain common area vegetation. Still others will have a special fee for pest spraying and mosquito control or irrigation and water levee maintenance. Where a Mello Roos fee is involved, these are charges that the builder of homes in the area originally agreed to and by purchase contract has now passed onto homebuyers who have moved into the new homes. All add to the base property tax for an affected Sacramento home.
In comparison to the rest of the country and major urban areas, Sacramento’s property tax rate is notably low. For example:
- Most of New York state pays between 3.49 percent and 3.76 percent.
- Milwaukee, WI gets a bill based on a 3.68 percent rate.
- Chicago, IL runs near 2.3 percent.
- Bridgeport, CN hovers just under 2 percent.
- New Jersey sits at 2.38 percent.
- The State of Texas averages 1.9 percent.
- Nebraska with all of its land available also charges 1.84 percent.
There are some places that are far lower, however. Maui County, HI pays only 0.17 percent in property tax, combined with living in paradise.
One aspect to note with Sacramento property taxes is that the base assessment of 1 percent is the start of the tax bill and the remainder is driven by the assessor’s determination of a property’s worth. This was quote noticeable to homeowners who bought before 2008. For example, a home bought in 2002 for $290,000 was taxed at approximately $4,200 annually. Then, in 2011 in the depth of the Recession, the property tax dropped near $3,700. Now, with the return of equity, the taxes for the same property are now closer to $4,900. This is all due to the assessor’s reevaluation of equity in a given home.
Mistakes Happen
In the midst of this annual exercise in handing money over to the government for what one already owns, the assessor’s office is constantly processing and updating thousands of homes in the Sacramento County area. And these formulas are being calculated by regular people who are humans. Long story short, humans make mistakes. Assessors are using all kinds of information that affect tax bills, and a lot of it is not summarized on a tax bill. That leaves room for variances, which can work to the disadvantage of a homeowner in Sacramento if not watched for. Further, property tax is a bit revenue stream for government so, no surprise, agencies are slow to lower taxes for lower values and quick to raise them for higher values. That too weighs into what a homeowner can end up paying. There is a process for disputing assessments, but conveniently the process is time-limited and not retroactive.
The Variability of Proposition 13
Of more value to homeowners is the fact that Sacramento shares the same nature of property tax treatment as other counties in California. So two homes with exactly the same square footage and size and amenities with the same values today can be taxed tremendously different. If one was owned for a long time, the tax value is likely to be far lower than the other if it was bought recently. That’s because of the protections of Proposition 13, limiting any major tax assessment re-assessment from being done until the home sells again. So it’s quite possible for one homeowner to be paying $1,000 for a home annually while the other is paying $3,500 under the same County taxes.
Sacramento Versus Other Counties
Is Sacramento an outrageous anomaly versus the other counties in the state in terms of property tax? No, it’s fairly average. What makes Sacramento’s assessments far higher, particularly in new developments, is the addition of various fees and HOA charges on new homes versus far older ones in well-established areas. This can be quite a shock for those who come from areas without such fees being added on their property taxes, and it’s often a hidden charge new buyers don’t anticipate, especially when first year taxes are paid in escrow. Sacramento home sellers are smart to read up and do their homework on all these charges to anticipate questions from buyers, especially given the fact that the fees vary between neighborhoods. It can create quite a competitive edge between Sacramento areas.
How does one find out what a Sacramento home assessment will be? There are two ways. First, the annual tax bill provides a basic detail of the assessments charged for the last tax period. Second, one could go to the County’s assessor’s website, type in the parcel number information, and receive the same summary level of data as well. This provides an easy way to compare property taxes ahead of time versus finding out after the fact and a sale.
2 Point Highlight
Sacramento today still has its standard property tax formula that is the same as any other county in the state.
It’s quite possible for one homeowner to be paying $1,000 for a home annually while the other is paying $3,500 under the same county taxes.
