What You Need to Know About San Diego Property Taxes

Property taxes are one of the most important costs to factor in when buying a home in San Diego. While California offers certain protections under Proposition 13, property taxes here can still come as a surprise for first-time buyers and even seasoned investors. Here’s a clear breakdown of how they work and what to expect when you make a purchase.

1. How Property Taxes Are Calculated

In San Diego County, property taxes are based on the assessed value of your home at the time of purchase.

• Base rate: About 1% of the assessed value.

• Additional taxes: Voter-approved local assessments and bonds (schools, infrastructure, etc.) often add another 0.2% to 0.5%.

• Typical range: Most homeowners pay between 1.1% and 1.25% of the purchase price annually.

Example: On a $1,000,000 home, you can expect around $11,000–$12,500 per year in property taxes.

2. Proposition 13 Protection

California’s Proposition 13 caps how much your assessed value can increase each year.

• The property tax base is set at the purchase price.

• Annual increases in assessed value are limited to 2% per year, regardless of how much the market value rises.
  This means long-term homeowners often pay significantly less than their new neighbors.

3. Supplemental Tax Bills

When you buy a home, you may receive a supplemental tax bill. This covers the difference between the seller’s old assessed value and your new assessed value.

• Example: If the seller bought the home years ago at $500,000 and you buy at $1,000,000, the county reassesses the property at $1,000,000. You will pay the difference in taxes for the remainder of the year.

• Important: Supplemental bills are in addition to your regular property tax bill, so buyers should budget for them.

4. Transfer Taxes When Buying and Selling

Another cost to understand is the documentary transfer tax:

• In San Diego County, the tax is $1.10 per $1,000 of the sale price.

• For a $1,000,000 home, that’s $1,100.

• By tradition in San Diego, this tax is typically paid by the seller, although terms can be negotiated in the purchase contract.

This is different from property taxes. The transfer tax is a one-time closing cost linked to the transaction, while property taxes are ongoing annual costs for the buyer.

5. Key Differences Between Seller and Buyer Costs

• Seller: Usually responsible for paying the transfer tax at closing, plus prorated property taxes up to the day of closing.

• Buyer: Pays property taxes going forward, starting from the day after closing, and may also receive a supplemental tax bill from the county.

6. Exemptions and Special Programs

San Diego homeowners may qualify for exemptions or reductions:

• Homeowners’ Exemption: Reduces the taxable value of a primary residence by $7,000 (saving about $70 per year).

• Senior and Veteran Programs: There are some tax postponement and relief programs for seniors and veterans who qualify.

Final Thoughts

Understanding property taxes before buying in San Diego is crucial for planning your budget. Expect ongoing annual taxes of about 1.1% to 1.25% of your purchase price, plus a supplemental bill after closing. Sellers usually cover the transfer tax, while buyers take on the new property tax obligations moving forward.