Kellee Spillman-Malone, Broker, 951-757-7713 | 28544 Old Town Front St. #205, Temecula CA 92590

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Buyer Beware of Property Taxes

Buyer Beware of Property Taxes

Lanham Property -HUD Home in Menifee. Tax rate 1.8%

Lanham Property -HUD Home in Menifee. Tax rate 1.8%

Buyer Beware of Property Taxes!Property Taxes are not all the same! At least in California. Literally one tract can have a tax rate of 1.25% and the tract across the street will have a rate of 1.8%. Go figure!! I have had conversations with our local Riverside County Treasurer Larry Ward and he really had no good explanation. Some tracks have a Mello-Roos bonds and other tracks have special assessments. It is important for the buyer to beware of the various tax rates and additional assessments whether it be Mello-Roos or Special Assessments as it can make a huge difference in their payment! In some cases it will even affect the buyers ability to qualify for a home!

Not all Real Estate Agents are aware they should pull the tax information for each and every property prior to showing it to their buyer thus allowing the buyer to fall in love with the property they cant afford! We see it happen all of the time where a Real Estate Agent shows one of our properties, the buyer proceeds with a home inspection and appraisal to the tune of about $800.00 just to learn at closing the buyer doesn’t qualify for the home due to the tax rate and Assessments/Mello-Roos. And to make matters worse, the seller will most likely want to keep the buyers deposit based on lost market time! So it is important the buyer is aware of their property taxes prior to writing offer on their dream home!

Most lenders are utilizing a tax rate of 1.25% and in Southwest Riverside County that doesn’t work in all areas! A difference in tax rate of 1.25% to 1.8% can throw the ratios way off for a loan reducing the amount of house a buyer can purchase, especially when the tax rate is compounded with Mello-Roos and or Special Assessments! In certain areas if we had to put a percentage on combining the tax rate, Mello-Roos and Special Assessments, the percentage of purchase price would be well over 3%. It is for this reason I preach.. BUYER BEWARE OF PROPERTY TAXES.

Another issue we see is where the buyer receives a Supplemental Property Tax Bill and doesn’t know why! The Real Estate agent failed to educate the buyer regarding purchasing a property with equity. The buyer sees the bill come in the mail and ignores it because he thinks it will be included in the Mortgage payment through the escrow account. No one told the buyer the Supplemental Tax bill is a one time tax that is the difference between the seller’s purchase price and the buyer’s purchase price and he will be responsible for paying this out of pocket. Although there are disclosures for this type of situation, not all Real Estate Agents utilize these forms and the buyer is completely taken off guard when they receive a bill due at the worst time.. Christmas!

Bottom line, as property owners we ALL pay property taxes but not ALL property taxes are the same. The taxes are based on the property, area and tract. Ultimately it is the buyer’s responsibility to investigate for themselves as to the tax rate, bonds, assessments and Mello-Roos taxes that go with their property and may affect not only their sale but their resale as well. The information for Riverside County Taxes can be found on line by going on https://taxpayments.co.riverside.ca.us/Search.aspx. www.teamreliablerealty.com