California Property Tax Exemptions
In 1978, an amendment to the Constitution limited how much California property tax could be collected. Proposition 13 allowed properties to be reassessed to current market value only if the property were to have a change in ownership or have completion of new construction (called the base year value). In addition, Proposition 13 generally limited annual increases in the base year value of real property to no more than 2 percent, except when property changed ownership or underwent new construction. As a result, longtime property owners, whose assessed values generally have not increased more than 2 percent per year, tend to have markedly lower property taxes than recent purchasers, whose assessed values tend to approximate market levels.
Additionally, what is known as a “Luxury Tax,” because it is also collected on pricey possessions, such as yachts and expensive jewelry, is collected from California businesses. Annually each business must file a 571-L or Business Property Statement in the county in which they are located.
What Is Exempt from Taxation?
Every homeowner automatically is eligible for a $7000 homestead exemption for their primary place of residence. The homeowner must make a one-time filing with the county assessor for this exemption. Real and personal property worth less than $10,000 is also exempt.
Disabled veterans and unmarried spouses of deceased disabled veterans are eligible for an exemption of $100,000 on their principal place of residence. The exemption may be raised to $150,000 if the applicant earns less than $40,000.
Growing crops are exempt. Grapevines are exempt for the first three years and orchard trees for the first four years after the season in which they are planted. Date palms under eight years of age are exempt. Standing timber is exempt but is taxed when harvested.
Household furniture, hobby equipment, and other personal effects are exempt. However, vehicles, aircraft, or boats with a value over $400 are not exempt. Nor is property used for a trade or business.
For businesses located in multiple places, taxes must be paid in each county in which the taxable property is located. Although county assessors are all trained by the Board of Equalization, the requirements for this tax varies for each county – even the deadlines for filing taxes may vary.
If a business disagrees with the assessment made, first contact the appropriate county to request an explanation of how the assessment was determined and inform the assessor of any facts affecting the value of the property. Most disagreements are settled this way, however, if an agreement cannot be reached an appeal should be considered.
In most counties an appeal is heard at an administrative hearing before the Board of Equalization. As a general rule, the property owner has the burden of proving that the assessor has improperly valued the property and the property owner can be represented by a lawyer.
Paramount Property Tax Appeal specializes in filing county 571-ls, and when applicable, we know how to file and effectively win an appeal. We represent our clients throughout the filing and appeals processes.