In a world of beautifully paved roads, good schools, and lush public parks, property taxes play an important role. In neighborhoods like Napa Valley, you can see property taxes at work every day, all around you. The taxes paid by homeowners and business owners go toward the quality of the environment in which your home rests. If you're ready to buy a house, it's important to understand property taxes in Napa Valley.
Of course, most people don't imagine property taxes when they envision the dream of owning a Napa Valley home. This is why skilled California real estate agents like Lauren Lawson always try to prepare first-time homeowners to better understand property taxes as they embark on a bright new chapter.
Buying a Napa Valley home: the beginning of property tax
The first time you become a homeowner is also the first time you'll pay property taxes to maintain the neighborhood in which you live. In California, property taxes are paid biannually, twice a year. Property tax rates are calculated annually, so you can pay half in April and half in November. You'll need to know the total amount of your annual property tax and set this aside for payments.
Some mortgages are configured to include property taxes in the monthly fee, which is held in an escrow account and paid on your behalf at the appropriate times. Be sure to ask about this when lining up your funding before the home purchase.
The property tax rate in Napa Valley
California property tax rates, rules, and what the taxes pay for are all determined by the county. Napa Valley homes reside in Napa County, where the property tax rate is
0.81%. If your home's value is $800,000, 0.81% equals $6,780 in annual property taxes. Napa County has relatively low property tax rates compared to most of California, which ranges as high as 1.23% in Kern County, and many counties tax above 0.90%.
Your first tax payments can come from escrow
During the home purchasing process, the buyer will put down a certain amount of "up-front" or "earnest" money in an escrow account. It's usually about 1% to 2% of the home's market value. This money has a dual purpose. If the buyer backs out of the sale, the seller receives the money as compensation for time off the market. However, when your home purchase is complete, the escrow money automatically goes toward your first property tax payment, and whatever is left typically goes toward your homeowner's insurance.
This little arrangement is designed to make the first year easier for new homeowners, ensuring that your property taxes are paid while your head is still spinning from the purchase and move-in process. But after the first year, you'll need to be prepared to handle property tax payments on your own. That is unless your mortgage also has an escrow-style arrangement.
How property tax is determined by home value
Property tax is measured in percent, but where does the state draw that percentage from? In California, property tax is based on the last purchase price. While you may have heard that property tax is based on appraisal value, this is only done in states outside of California. In fact, the property tax baseline is why some homebuyers will offer concessions such as covering a seller's closing costs in order to bring down a home's official selling price during negotiations.
Of course, this does make it easier for you to predict and calculate your property tax rate at the time of purchase. Property value increases may be automatically levied by the state at an average of 1% per year and no more than 2% per year.
Claim the homeowner's tax exemption
You can lower your property tax by about $57 a year when you remember to claim the homeowner's tax exemption. Every California resident can reduce their property taxes by $7,000 from the baseline price for their primary residence. When it comes to annual costs of homeownership, every little bit counts. Therefore, it's worthwhile to remember to file your homeowner's tax exemption each year to save a little on the property's accumulative cost.
How to pay your Napa Valley property taxes
Napa County makes it possible to
pay your property taxes online, in person, and through the mail. You can even pay over the phone if this is your preference.
If you choose to pay online, as most people do, you can pay by credit or debit card or with an e-check payment. If you choose to pay by mail, you can do so through the pre-addressed envelope that comes with your mailed tax bill. Always send a check or money order, never cash, if using the mail. Those who pay property tax in person can make use of the drop box located outside the main entrance office to eliminate the need to stand in line.
You'll typically pay half of your annual property tax amount.
What property taxes fund in Napa Valley
What do your property taxes fund in Napa County? This is an important question to ask. Many people are interested to know where their taxes are going, and with property taxes, it's relatively easy to find out. Property taxes are allocated according to county laws to pay for specific community resources that keep neighborhoods maintained and supplied with public services.
The following services are typically covered by California property taxes:
- Public K-12 schools
- Community colleges
- Fire protection services
- Parks and recreation areas
- Hospitals
- Public cemeteries
- Sanitary services
- Irrigation
- Mosquito management
- Road maintenance and highway lighting
- County water and public utilities
These services are important in order to maintain an enjoyable and well-kept community. Property taxes make it possible to focus solely on your personal lifestyle rather than worrying about road quality, fire safety, local park maintenance, or the quality of the local schools. Everyone contributes, and everyone benefits.
Everything you need to know as a new homeowner in Napa Valley
Buying a house in Napa Valley should be a joyful and easy experience. As a real estate agent, Lauren Lawson can guide you through the homebuying process and ensure you're familiar with the routines of homeownership in Napa Valley so that your experience is worry-free.
*Header photo courtesy of Lauren Lawson
