CHICAGO – If you’re looking for a home that’s a steal at $2.7 million, it’s probably going to cost a little more than the house on the market in your city.
That’s because of California’s new real estate taxes.
For example, if you’re paying a $1,600 per month property tax, you’ll be paying about $3,800 in property taxes per year.
That’s a $7,500 tax increase per year for every $1 you pay.
The new real property taxes are due July 1.
The first six months of the year are the most expensive, with property taxes doubling each month.
And the highest-paying period is June through August, when property taxes increase by another $2,000 per year, per the Real Estate Board of Greater Los Angeles.
It’s not a lot of money, but it is an enormous tax increase for those who have never paid their taxes before, said Chris Jager, chief of research and economic analysis for the real estate firm Zillow.
The first six-month increase is the largest since the tax was imposed in 2011.
The second highest increase is July 1, when taxes increase again by another two percent.
That would be a $3.5 million increase for every person paying $1.7 billion in property tax.
The last increase is August 1, which will increase by $1 million to $4.4 million per person, per Zillows calculations.
Jager said California’s real estate tax increase will likely cost some of its biggest home buyers and sellers.
He said many sellers may be tempted to cut their prices to attract more buyers.
“The more expensive you are, the more people you’ll get that are going to pay higher property taxes,” Jager said.
“I think it’s very risky, because the people that are in the middle are going be the ones that are paying the highest tax.”
But if you have the cash, Jager says there’s little reason to cut your price.
“We’re seeing a trend where people are starting to pay more for their homes,” he said.