Buying a $1 Million House? Don’t Use the Seller’s Property Tax Bill

There’s a number on a real estate listing that I wish buyers would basically ignore: the current property tax amount.

Not because it’s inaccurate. Because it may have almost nothing to do with what you are going to pay.

This is especially important in places like Long Beach, Seal Beach and Huntington Beach, where you can easily buy a house from someone who has owned it for decades. Their property tax bill might look fantastic. Unfortunately, you don’t get to pack that into the moving truck with the rest of the house.

The Seller’s Property Taxes Belong to the Seller’s Story

California property taxes operate under Proposition 13. Generally, when a property changes ownership, it is reassessed based on its value at the time of the ownership change.

So imagine someone bought a Long Beach house 30 years ago for $250,000 and you’re buying it today for $1.2 million. You don’t simply inherit their old assessed value and continue paying property taxes based on what they paid decades ago.

That means when you see an MLS listing showing surprisingly low annual property taxes, please don’t build your monthly housing budget around that number.

You’re looking at the seller’s tax history, not necessarily your future tax bill.

And Then There’s the Supplemental Property Tax Bill

This is the part I really want buyers to know about before they close.

After a qualifying ownership change, California uses a supplemental assessment to account for the difference between the property’s previous assessed value and its newly assessed value. That can result in a supplemental property tax bill in addition to the regular annual property tax bill.

In Los Angeles County, supplemental bills can arrive months after you purchase the property. The county also warns homeowners that these bills are generally not paid through your mortgage impound account and are the homeowner’s responsibility.

So imagine closing on your new house. You’ve paid the down payment and closing costs. You moved. You bought furniture. You painted. You discovered three things that immediately needed to be repaired because apparently houses enjoy hazing their new owners.

And then months later, another property tax bill arrives.

I don’t want you calling me saying, “Kristin, WHAT IS THIS?”

I want you to know about it before you ever get the keys.

So What Should You Actually Budget?

I don’t want buyers estimating their future property taxes based on what the seller paid last year.

Instead, when we’re seriously evaluating a property, I want your lender and escrow professionals helping you estimate the taxes based on your expected purchase price and the actual taxes and assessments applicable to that property.

Those additional assessments matter too. Two houses with exactly the same purchase price don’t necessarily have exactly the same property tax bill.

You’ll sometimes hear people use a quick percentage of the purchase price to estimate property taxes. That can be useful for rough napkin math, but when we’re deciding whether you can actually afford a particular house, I want better than napkin math.

This Matters Even More When You’re Comparing Houses

Let’s say you’re comparing two $1.2 million homes.

One has an HOA. One has different local assessments. One needs $100,000 worth of work. One has newer major systems. Maybe one is in Long Beach and the other is in Seal Beach, so now we’re even comparing properties in two different counties.

Those aren't simply two $1.2 million houses.

They’re two completely different cost-of-ownership decisions.

That’s the calculation I care about.

When you’re deciding what you can comfortably afford, we need to look beyond principal and interest. Property taxes, homeowners insurance, HOA dues, maintenance, planned renovations and the amount of cash you want left after closing all matter.

Because there’s a big difference between qualifying for a house and comfortably owning it.

I don’t want you technically approved for the house and then realizing every available dollar you have is going into owning it. I want to know what buying this house actually does to your life.

Can you still save? Can you handle a major repair? Can you make the improvements you already know you want to make? Does the payment actually feel comfortable?

That’s the bigger conversation.

The Purchase Price Is Only the Beginning

If you’re shopping for a house in Long Beach, Seal Beach or Huntington Beach and you see the current property taxes on the listing, don’t automatically assume that’s what you’re going to pay, especially if the seller has owned the house for a very long time.

Get an estimate based on your purchase. Understand the possibility of a supplemental tax bill. And look at the actual cost of owning the property before you fall completely in love with the kitchen.

The price on the listing tells you what it might cost to buy the house.

I want you to understand what it could cost to own it.

Thinking About Buying in Long Beach, Seal Beach or Huntington Beach?

If you’re considering buying, I’ll help you look beyond the list price and understand the bigger picture before you write the offer. The goal isn’t just to get you into a house. It’s to help you make a real estate decision that actually makes sense for you.

Ready to make your move? Let’s talk.

CONTACT KRISTIN
[email protected]
954-608-6582

Kristin Gutierrez
Helping Homeowners Turn What You Have Into What You Want.

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