As real estate agents we get a lot of questions about property taxes in San Francisco. Below are answers to our most frequently asked property tax questions (by both seasoned home owners and first time buyers alike!).
Property taxes are taxes imposed by the local government on property bought or owned by an individual or legal entity. The tax amount is usually based on the value of the property, including land. Property owners can appeal a property appraisal if they believe that it is too high (more on that later). Property values can fluctuate over time, depending on property improvements and/or the value of surrounding properties.
Property taxes are charged on a fiscal year beginning July 1st and ending June 30th; hence tax years are referred to as 2019/2020, 2020/2021. Taxes are billed in two equal installments: first installment covers July 1st through December 31st, second installment covers January 1st through June 30th. Tax bills are sent to homeowners in the last week of October. Tax payments are due November 1st and February 1st; tax payments are delinquent on December 10th and April 10th.
“Property taxes” and “real estate taxes” are often used to mean the same thing, but San Francisco real estate taxes only cover taxes on “real property” like a home, vacation home or rental property, while property taxes can include personal property like vehicles, portable machinery and equipment, office furniture, tools, and supplies.
The California State Board of Equalization defines “real property” as:
“Personal property” is described as:
In most cases, the assessed valuation in your first year of ownership will be the same as the purchase price.
Escrow prorates taxes, but the actual taxes may not have been paid, and you are responsible for any unpaid taxes at escrow closing. Read your escrow papers to determine if any portion of annual taxes were paid by the previous owner prior to closing. The Tax Collector will not send a bill for the remainder of the year in which you acquired the property unless requested. If any taxes remain unpaid, call the Tax Collector and request a bill; have the Assessor’s Identification Number before calling.
Mello-Roos districts are designated areas which have issued bonds for community facilities, for example, earthquake retrofitting of schools, and for which annual tax levies are collected as part of the property tax billing. There are two districts in San Francisco. One encompasses the entire City and the other is a small area South of Market. The cost for the Mello- Roos Community Facility Bonds in most parts of San Francisco is $39.04 for a single family residence.
Upon change of ownership, the Assessor’s Office will reappraise the property and will bill the new owners for any difference in taxes resulting from a higher assessed value. The Assessor will issue you a supplemental assessment bill which is prorated based on the number of months remaining in the fiscal year ending June 30th. More information about reassessments can be found below.
Real property is reassessed upon change of ownership and, in certain circumstances, the construction of improvements. The new assessed value is equivalent to the purchase price and is subject to being increased by as much as two percent each year.
Under Proposition 13, passed by California voters in 1976, the ad valorem tax rate is set at one percent of the full cash (or assessed) value of real property. This limitation, however, does not apply to special assessments levied for the purpose of paying the interest and redemption charges on bonded indebtedness approved by county voters. The assessed value of real property is subject to being increased by as much as two percent each year, or by a larger amount upon change of ownership.
Buyers should be aware that the assessed value of real property is adjusted upon change of ownership to an amount that is presumed by law to be equal to the purchase price of the property. However, that presumption may be rebutted by the tax assessor and a higher value assessed where the assessor can establish the higher value by a preponderance of the evidence using accepted methods of valuation. Also, under certain circumstances, the construction of new improvements to an existing property can trigger an adjustment to the assessed value of the property.
Like we mentioned above, the real property tax due for any property can be calculated by multiplying the assessed value of the property by the real property tax rate for the county in which the property is located. The San Francisco property tax rate for fiscal year 2019-20 is 1.188 percent — but note that it may change year to year. You can view and print your current property tax statements or view past payment history by visiting the Property Tax Payment Portal.
After change of ownership, a supplemental tax bill may be issued to collect taxes owing for the current tax year based on the difference between the previous and the new assessed values of the real property. The seller is responsible for the payment of taxes due prior to close of escrow and the buyer is responsible for the payment of taxes due after close of escrow, including any supplemental tax bill(s).
Since the assessed value of real property cannot exceed the fair market value, State law provides a way to challenge the assessed value when the market value declines. For questions regarding ad valorem taxes, buyers and sellers should contact the county assessor’s office at 415-554-5596, visit the assessor’s office website, and/or discuss the situation with a qualified real estate or tax attorney or certified public accountant.