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Do renters in California pay council / property tax?

Do renters in California pay council / property tax?

Old Sep 27th 2011, 9:46 am
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Default Do renters in California pay council / property tax?

Hi,

Can anyone help? I am trying to work out a monthly budget regarding a possible company relocation to California.

Is there an equivalent in California to a UK council tax and if so should this be the property owners responsibility or mine a the property renter?

Any advise would be most appreciated.

Thanks
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Old Sep 27th 2011, 1:20 pm
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Default Re: Do renters in California pay council / property tax?

Originally Posted by CKB40 View Post
Hi,

Can anyone help? I am trying to work out a monthly budget regarding a possible company relocation to California.

Is there an equivalent in California to a UK council tax and if so should this be the property owners responsibility or mine a the property renter?

Any advise would be most appreciated.

Thanks
Property tax is in the rent.
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Old Sep 27th 2011, 2:41 pm
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Default Re: Do renters in California pay council / property tax?

Originally Posted by CKB40 View Post
Hi,

Can anyone help? I am trying to work out a monthly budget regarding a possible company relocation to California.

Is there an equivalent in California to a UK council tax and if so should this be the property owners responsibility or mine a the property renter?

Any advise would be most appreciated.

Thanks
Unpaid property tax becomes a lien against the property. Landlord would have to be crazy to have the tenant pay it directly.
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Old Sep 27th 2011, 3:13 pm
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Default Re: Do renters in California pay council / property tax?

Originally Posted by CKB40 View Post
Hi,

Can anyone help? I am trying to work out a monthly budget regarding a possible company relocation to California.

Is there an equivalent in California to a UK council tax and if so should this be the property owners responsibility or mine a the property renter?

Any advise would be most appreciated.

Thanks
In a word NO.....I have rented a few properties over the years here in CA and this has never been a requirement.
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Old Sep 27th 2011, 3:51 pm
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Default Re: Do renters in California pay council / property tax?

In all the places we have rented we haven't paid property tax, thats the owners responsibility.
You do need renters insurance though, as the owners homeowners insurance usual only covers the actual property and not your belongings.
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Old Sep 27th 2011, 4:20 pm
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Default Re: Do renters in California pay council / property tax?

Thanks all, that's great help
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Old Sep 27th 2011, 4:58 pm
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Default Re: Do renters in California pay council / property tax?

Owners generally pay all the taxes as part of their monthly mortgage payments. They don't pay the City directly.

You may be paying other taxes, like sales tax in effect.
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Old Sep 27th 2011, 11:45 pm
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Default Re: Do renters in California pay council / property tax?

Originally Posted by sir_eccles View Post
Owners generally pay all the taxes as part of their monthly mortgage payments. They don't pay the City directly.
That does happen when the lender requires an escrow account to be set up for the property taxes, but while that is not at all unusual I think it is a stretch to suggest that it is "generally" the case - I have certainly always paid my property taxes direct to (in my case) the County - not sure I would trust anyone else to do it ...
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Old Sep 28th 2011, 12:21 am
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Default Re: Do renters in California pay council / property tax?

Originally Posted by CKB40 View Post
Hi,

Can anyone help? I am trying to work out a monthly budget regarding a possible company relocation to California.

Is there an equivalent in California to a UK council tax and if so should this be the property owners responsibility or mine a the property renter?

Any advise would be most appreciated.

Thanks
No.

There is no equivalent of the council tax. Property tax on real property is paid by the landlord. There is sales tax although food for consumption at home is not subject to that tax. [US does not have a VAT].

California does have an income tax. As a general rule, it is based upon the Federal income tax -- in fact, the California FTB return lifts information from the attached Federal Tax return and then California adjustments. One of those adjustments is for a "renter's credit" -- the idea of that is homeowners get a deductions for property taxes, so renters who do not pay property tax are allowed a renter's credit instead. In fact, it is possible to file a zero income FTB return just to get the renter's credit.

Automobiles are subject to an annual registration fee.
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Old Sep 28th 2011, 3:21 am
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Default Re: Do renters in California pay council / property tax?

Originally Posted by md95065 View Post
That does happen when the lender requires an escrow account to be set up for the property taxes, but while that is not at all unusual I think it is a stretch to suggest that it is "generally" the case - I have certainly always paid my property taxes direct to (in my case) the County - not sure I would trust anyone else to do it ...
Normally if you put less than 20% down, money must be withheld to cover property taxes and insurance. If later, the equity in your home exceeds 20%, that requirement can normally be removed.
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Old Sep 28th 2011, 7:11 pm
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Default Re: Do renters in California pay council / property tax?

Hi,

As above you don't pay 'Council Tax' as such, however some rentals will have you paying for the things that Council Tax in the UK cover as a separate bill- such as water, waste disposal, sewage etc etc.

Rik
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Old Sep 29th 2011, 5:42 am
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Default Re: Do renters in California pay council / property tax?

Total monthly mortgage payment (PITI) over here typically consists of principal, interest, taxes and insurance. Ideally, a LL obviously wants to have a tenant pay rent to cover their monthly payment... and tenant is responsible for everything else per se. Remember that rent is negotiable as anything else in the world.

If one is talking about commercial real estate and leases, that is a whole different scenarios. eg, NNN (triple net) Lease ... single net, double net, etc etc etc. so it is up for discussion who pays for what etc.

Originally Posted by md95065 View Post
...
Double check if your payment is PITI or not...
typically the city/county/whomever will send the property tax notice to the mortgage company and send you a copy for your records etc. Normally a bank will pay the whole year and you then pay it back over the 12 months in your payment. Typically, you won't have a choice but to have escrows... and they are there really for default scenarios; suppose you default after 9 months/payments... there are 3 remaining months worth of tax which is owed to the bank... that is where the escrows come into play, its prepaid tax reserve.
If you are paying your taxes and still paying P.I.T.I., you might be paying double and have a credit with the city/county/whomever. If there is a (rare) case where a bank doesn't pay the taxes and have to intervene and pay the taxes, they may add that amount to the principal or short-term adjust your monthly and probably penalize you heavily for having to pay the taxes.

Where you have to really pay attention about property taxes and ensure that they have been paid etc is when you refinance.... banks do make mistakes and I have seen where they've screwed up and the property taxes didn't get paid.

Originally Posted by Michael View Post
Normally if you put less than 20% down, money must be withheld to cover property taxes and insurance. If later, the equity in your home exceeds 20%, that requirement can normally be removed.
... that sounds more like your talking about a mortgage insurance premium. Escrows have nothing to do with someone's equity... escrows are there to ensure that tax and insurance is covered; especially in default scenarios... not only do you owe a few months tax to the bank - they also don't want to jeopardize their senior position on a property.
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Old Sep 29th 2011, 6:24 am
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Default Re: Do renters in California pay council / property tax?

Originally Posted by Tarkak9 View Post
Double check if your payment is PITI or not...
typically the city/county/whomever will send the property tax notice to the mortgage company and send you a copy for your records etc. Normally a bank will pay the whole year and you then pay it back over the 12 months in your payment. Typically, you won't have a choice but to have escrows...
OK - perhaps things have changed since I first took out a mortgage in the US about 20 years ago, or perhaps I just wasn't "typical", but I never had, and never was required to have, an escrow account, my mortgage payments were principal and interest only and I have always paid the property taxes myself.
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Old Sep 29th 2011, 6:41 am
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Default Re: Do renters in California pay council / property tax?

Originally Posted by Tarkak9 View Post
... that sounds more like your talking about a mortgage insurance premium. Escrows have nothing to do with someone's equity... escrows are there to ensure that tax and insurance is covered; especially in default scenarios... not only do you owe a few months tax to the bank - they also don't want to jeopardize their senior position on a property.
The reason for the 20% threshold for both is that both assume that there is enough equity in your home to make any payments in case you default on either your mortgage payment or your taxes. But they are not related and over the past 40 years in California, banks have typically only required an escrow account if you have less than 20% down.

That may have changed recently since home prices have been dropping instead of rising and foreclosure rates are higher.

Like md95065, I have owned many homes over the past 40 years and never had an escrow account even the home I purchased in the middle of the 1980's S&L crisis since I had 20% down.

Last edited by Michael; Sep 29th 2011 at 6:46 am.
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