Property Tax season is here. This is a time to celebrate that you own real estate. In the words of Louis J. Glickman, “the greatest investment on earth is earth”, so be sure to give yourself a pat on the back, and do something fun! Paying your property taxes is simple. Here are few common questions that come up during property tax season that may help clarify things:
1.) Did you buy your real estate as an individual, entity (Corporation, Trust, LLC, etc.), or as an IRA?
You must pay your property taxes from the same source as when you purchased your property in order to avoid “commingling of funds” which ultimately can lead to a loss in tax advantages. For example, if you bought your real estate using an IRA, you must contact your IRA and have the IRA pay the property tax bill.
You must pay your property taxes from the same source as when you purchased your property in order to avoid “commingling of funds” which ultimately can lead to a loss in tax advantages. For example, if you bought your real estate using an IRA, you must contact your IRA and have the IRA pay the property tax bill.
2.) Do you have partners or did you purchase your property alone?
If you have partners that means you own a certain percentage of the property. The percentage that you own is the same percentage of the tax bill you are responsible for. For example, if you own 30% of the property and the total tax bill is $300, you are responsible for paying $90 [$300 x 30%].
3.) What do you need to include on your check to the property tax collector?
If you have partners that means you own a certain percentage of the property. The percentage that you own is the same percentage of the tax bill you are responsible for. For example, if you own 30% of the property and the total tax bill is $300, you are responsible for paying $90 [$300 x 30%].
- Note: All partners should send their bill together in one envelope to the tax collector. The tax collector does not accept partial payments so it is important that all of the partners put their checks into one envelope. Simply designate one of the partners to collect all of the checks and send to the tax collector. For example, if you purchased 30% with your IRA, John purchased 40% with his IRA, Suzy purchased 20% with her corporation, and Michelle purchased 10% as an individual; then you would contact your IRA and have them make a check payable to the tax collector but mail it to your address, John would contact his IRA and his IRA will make a check payable to the tax collector but mail it to your address, Suzy would have a check written from her corporation payable to the tax collector but mailed to your address, and Michelle would write a personal check made payable to the tax collector and sent to your address. Once you receive all of the checks, be sure they all add up to the amount owed and put them in one envelope and send it to the tax collector.
3.) What do you need to include on your check to the property tax collector?
Be sure to place the “Assessors ID. No.” and the tax year in the memo section of your check. This will help the Tax Collector identify which property and for which tax year the check will be applied to. For example the memo section of your check would read:: 5555-555-555, 2014 Taxes.
4.) If you purchased the property with partners, should you let one of the partners pay all of the taxes and then just simply reimburse them for the portion of your taxes?
Many find it a lot less complicated to allow one person in a partnership to pay the property taxes for everyone in the partnership and then everyone can reimburse that person. Although this may be more convenient in terms of dealing with the County Tax Collector it could lead to serious complications later.
Adverse possession is when someone takes possession of your real estate with the intention of acquiring valid title to it. One of the steps a trespasser needs to successfully execute adverse possession is to pay the property taxes. Always pay your own share of property taxes directly to the Tax Collector, this continues to certify that you are the owner. For instructions on how to properly pay your portion of the property taxes when in a partnership, see number 2 above.
5.) Should you pay your property taxes in installments?
No. You have the option to pay your property tax bills in two installments, however if financially feasible, I suggest you pay the full amount owed all at once. Paying your taxes in full up-front helps to avoid having to deal with property taxes twice per year.
6.) When should you receive your tax bill?
Every year you should receive your property tax bill by November 1st. Keep in mind you are responsible to pay your taxes even if you didn’t receive a bill. If you haven’t received your property tax bill by November 1st, try the following:
Many find it a lot less complicated to allow one person in a partnership to pay the property taxes for everyone in the partnership and then everyone can reimburse that person. Although this may be more convenient in terms of dealing with the County Tax Collector it could lead to serious complications later.
Adverse possession is when someone takes possession of your real estate with the intention of acquiring valid title to it. One of the steps a trespasser needs to successfully execute adverse possession is to pay the property taxes. Always pay your own share of property taxes directly to the Tax Collector, this continues to certify that you are the owner. For instructions on how to properly pay your portion of the property taxes when in a partnership, see number 2 above.
5.) Should you pay your property taxes in installments?
No. You have the option to pay your property tax bills in two installments, however if financially feasible, I suggest you pay the full amount owed all at once. Paying your taxes in full up-front helps to avoid having to deal with property taxes twice per year.
6.) When should you receive your tax bill?
Every year you should receive your property tax bill by November 1st. Keep in mind you are responsible to pay your taxes even if you didn’t receive a bill. If you haven’t received your property tax bill by November 1st, try the following:
- Contact your partners and see if one of them received it. If so, ask for a copy.
- Visit the Tax Collector’s website, find the “Pay Taxes Online” link/button, type in the tax “Assessor’s ID No” for your property, and the property tax amount owed should come up. If you don’t know the tax collector’s website just search for it online by including the county the property is located in. For example, you can search: Tax Collector Riverside County. Click here for step-by-step instructions on how to access your Los Angeles County Tax Bill online.
7.) Why did you receive a Supplemental Tax Bill?
Whenever a property changes ownership or there is new construction the Tax Assessor will reappraise the property. If there is a difference between the old assessed value and the new assessed value a Supplemental Tax Bill will be issued to cover the difference. The County has up to 5 years to issue the Supplemental Tax Bill. It is normal to receive an Annual Tax Bill annually and a Supplemental Tax Bill sometime during the first few years after purchasing a property.
Whenever a property changes ownership or there is new construction the Tax Assessor will reappraise the property. If there is a difference between the old assessed value and the new assessed value a Supplemental Tax Bill will be issued to cover the difference. The County has up to 5 years to issue the Supplemental Tax Bill. It is normal to receive an Annual Tax Bill annually and a Supplemental Tax Bill sometime during the first few years after purchasing a property.
8.) How do you interpret your property tax bill?
Property Tax Bills vary from County to County, however, they usually include similar information.
9.) Can you write-off your property taxes?
Consult your tax professional. Usually, in order to write-off property taxes, the property must be generating some type of cash flow.
Property Tax Bills vary from County to County, however, they usually include similar information.
- Click here for a comprehensive understanding of the Los Angeles County Annual Property Tax Bill.
- Click here for a comprehensive understanding of the Los Angeles County Supplemental Property Tax Bill.
- Click here for a comprehensive understanding of the Riverside County Property Tax Bill.
9.) Can you write-off your property taxes?
Consult your tax professional. Usually, in order to write-off property taxes, the property must be generating some type of cash flow.
10.) How do you pay your property taxes using your IRA?
Every IRA custodian is different and therefore each IRA custodian has a different process on how you instruct them to pay a bill on behalf of your IRA. Contact your IRA custodian and they will be able to help you with the process.
If you happen to use Equity Trust Company as your IRA custodian click here for a step-by-step guide on how to pay your property tax bill online with ETC.
11.) When are property taxes due in California?
An easy way to remember when property taxes are due in California is to remember this mnemonic: No Darn Fooling Around!
Every IRA custodian is different and therefore each IRA custodian has a different process on how you instruct them to pay a bill on behalf of your IRA. Contact your IRA custodian and they will be able to help you with the process.
If you happen to use Equity Trust Company as your IRA custodian click here for a step-by-step guide on how to pay your property tax bill online with ETC.
11.) When are property taxes due in California?
An easy way to remember when property taxes are due in California is to remember this mnemonic: No Darn Fooling Around!
12.) What are the critical dates for property taxes in California?
California property taxes operate on a fiscal year as compared to a calendar year. The fiscal or tax year starts on July 1st and goes through June 30th of the following year.
On January 1, preceding the tax year property taxes become a lien on real property. The first installment is due November 1, but no later than December 10. The second installment is due February 1, but no later than April 10.
If you don't have a property tax bill to worry about, you're missing all of the fun! Be sure to join our next event and learn how to invest in the greatest investment on earth!
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