Taxes invade almost every aspect of our daily lives and property ownership is no exemption. When investing in such a large asset it is important to understand the different types of real property taxes and fees associated with the purchase. Although the process of buying a home is often handled by a real estate agent, it is important to know the ins and outs of each tax and fee associated with buying a property.
1. Property Taxes
Depending on the location in which you are purchasing a property, property taxes will either be collected by the county, city, or specific districts (such as school districts) within that area. An assessment will most likely be made by a county official who will assess the party involved with the purchase.
That assessment will then be sent a county Auditor-Controller that determines the amount of taxes paid. Property taxes will be imposed when purchasing any property in the Unites States.
2. Parcel Tax
If a county needs additional support for government services such as police, fire, or educational services, a parcel tax on properties within that county may be instated. Whether or not a parcel tax is imposed may depend on a two-thirds vote from county residents.
Parcel taxes are not necessarily based upon the value of the property, but the features of the property such as square footage. Parcel taxes are often imposed after the sale of a property but maybe instated prior to purchase, which makes it important for property buyers to know if any parcel taxes exist before purchasing.
3. Documentary Transfer Tax
This tax depends on the location of the county in which a property is sold. Documentary transfer taxes are collected by a county representative any time a property is sold or exchanged through public records.
4. Property Transfer Tax
When the transfer of the title of a property is passed from one party to another, a property transfer tax may also be imposed. These taxes are generally non-deductible and may be required by the county, city, or local legislature.
5. Property Related Fees
These fees are generally in regard to utility requirements of a property such as sewage, water, refuse collection and clean up building demolition, or groundwater treatment. Such fees include:
User Fees and Assessments
- Planning Permits
- Development Fees
- Parking Permits
- User Fees
- Copying Fees
- Recreational Classes
- Gas and Electricity Payments
- Security Services
- Wholesale Water Services
- Transit Services
Regulatory Fee’s
- Regulations
- Permits
- Inspections
Rents
- Charge for Entrance
- Use or Rental of Government Property
Penalties
- Fines
- Forfeitures
- Interest Charges for Violation of the Law
Voluntary Contracts
- Contracts Imposed by a Non-Government Domain
Understanding these taxes and fees (and whether they apply to a property that you are looking to purchase) helps you better assess your finances during the buying process. Knowing these taxes and the importance of paying them will make you a well-informed buyer and better able to keep up with the state, county, and local authorities.
If you have questions about real property taxes and fees, reach out to us today.
Our California estate planning attorneys help clients in Oxnard and the surrounding areas of Ventura County with a complete range of trust and estate services. We can help you figure out the best course of action for your estate and create a legally valid plan under California law. Call Lowthorp, Richards, McMillan, Miller & Templeman, APC today at (805) 981-8555 or contact us online for more information.