California real estate: property tax, closing costs & insurance
California’s Proposition 13 means the property tax basis resets to your purchase price at closing, then grows at most 2% a year — so the seller’s current tax bill tells you almost nothing about what you will actually pay.
Property tax in California
The effective rate runs about 1.16% of assessed value. Prop 13: 1% base + voter-approved local bonds (~0.1–0.3%). Assessed value resets to purchase price on sale, then grows ≤2%/yr. Annual assessment growth is capped at 2% for an owner-occupant. A homestead exemption of $7,000 reduces the taxable basis for a primary residence.
Transfer tax & closing costs
County documentary transfer tax $1.10/$1,000. City taxes add: LA 0.45% (+4%/5.5% "Measure ULA" above $5.15M), SF progressive 0.5–6%. Recording runs a flat $225. Title insurance is customarily paid by the buyer and seller, split, with a minimum owner’s premium of $400.
Insurance & capital gains
Wildfire zones (FAIR Plan) can double base rate. CEA earthquake rider optional but recommended. Capital gains taxed as ordinary income; top 12.3% + 1% mental health surtax >$1M.
Worked example: a $350,000 ARV flip in California
Six-month hold, $45,000 rehab, 15% target profit margin, all-cash. This is the same reverse waterfall the calculator runs — see it live for your actual property.
- After-repair value$350,000
- Rehab budget−$45,000
- Closing costs — acquisition−$5,875
- Closing costs — disposition−$18,785
- Holding costs, 6 months−$3,049
- Target profit, 15%−$52,500
- Maximum Allowable Offer$224,791
If you’re investing
Never underwrite off the seller’s current property tax bill. Under Prop 13 the assessment resets to your purchase price on transfer, so a house that has been held since the 1990s can see its tax bill triple for the new owner even at the same millage rate.
If this is your home
City-level transfer taxes stack on top of the county rate — Los Angeles adds roughly 0.45% (plus the additional “Measure ULA” tax above $5.15M) and San Francisco’s tax is steeply graduated by price, so the same house can cost more to close on inside city limits than just outside them.
Best suited for: Long-term holders who benefit from the 2% annual assessment cap; short holds get less of the Prop 13 advantage.
California FAQ
What is the Prop 13 property tax rate in California?+
The base rate is 1% of assessed value, plus voter-approved local bonds that typically add another 0.1–0.3%, for an effective rate usually just over 1%.
Does buying a house in California reset the property tax?+
Yes. Proposition 13 resets the assessed value to the purchase price at the date of transfer, and it can then rise at most 2% per year until the next sale.
Are California capital gains on a home sale taxed at a special rate?+
No. California taxes capital gains as ordinary income, up to 13.3% at the top bracket, with an additional 1% mental-health surtax on income over $1 million — there is no reduced long-term rate as there is federally.
See the exact number for your California property
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Other state guides
Sources: state and county assessor publications, state department of revenue transfer-tax schedules, and title-rate manuals filed with each state’s insurance regulator, effective 2025-01-01. Figures are estimates for planning purposes, not tax or legal advice — confirm with a licensed professional before closing. How the calculator works