Understanding Property Taxes (Bay Area Edition) 2025

Property taxes are a fact of life in Fremont and across the Bay Area, so understanding them is crucial for budgeting and avoiding surprises. This Bay Area property tax guide (based on our 24-minute podcast – [Listen to the full podcast here]) explains what property taxes are, how property taxes work in California under Proposition 13, Bay Area nuances like Mello-Roos, exemptions that offer property tax savings, reassessments, transfer taxes, and tips for payment.

What Are Property Taxes?

Property taxes are annual local taxes on real estate based on the property’s value, funding essential services like public schools, police and fire departments, and road maintenance.

How Property Taxes Are Calculated

Generally, your property tax is calculated by multiplying your home’s assessed value by the local tax rate. In California, real estate taxes are governed by Proposition 13, which sets the base property tax rate at about 1% of assessed value and limits annual increases in assessed value to 2%. For example, a $700,000 home would owe about $7,000 per year in base tax. Some neighborhoods also have Mello-Roos districts – special taxes to fund new infrastructure. Homes in a Mello-Roos district pay an extra tax each year for those improvements. Be sure to ask about any Mello-Roos or special assessments when buying, since they will increase the total tax bill.

Property Tax Exemptions and Savings

Many homeowners qualify for exemptions that provide property tax savings by reducing the home’s taxable value. A common example is the Homeowners’ Exemption for a primary residence, which knocks a small amount off your assessed value. There are also programs for certain groups like seniors, veterans, and disabled homeowners that can further lower your bill if you qualify. While the standard homeowner exemption savings are modest, some programs offer more significant relief. Check with your county assessor or a tax professional about any exemptions available in your area, since rules vary.

Reassessments and Proposition 13

Under Prop 13, your home’s assessed value can increase by a maximum of 2% per year while you own it, preventing big tax jumps. But when a property is sold or new construction is added, it’s reassessed at the current market value (so new buyers often pay higher taxes than long-time owners). If you think your assessed value is too high, you can appeal it with the county — just be mindful of appeal deadlines.

Transfer Taxes on Home Sales

When you sell or buy a home, be prepared for transfer taxes – a one-time tax on the transaction. In most of California (including Fremont), the transfer tax is about 0.11% of the sale price. Some cities charge an extra transfer tax on top, so the total can be higher. This tax is paid at closing, so remember to factor it into your closing costs.

Paying Your Property Taxes

The easiest way to pay property taxes is often through an escrow account with your mortgage. Your lender collects a portion of the tax each month and pays the county for you when it’s due, so you don’t miss a payment. If you don’t have an escrow account, you’ll need to pay the county directly, typically in two installments per year. Mark your calendar for due dates to avoid penalties.

If you have more questions or need help with real estate in Fremont or nearby, I’m here to help. Contact Harvinder Balu, your local Fremont real estate agent with Realty Experts, for professional guidance. If you’re looking to buy or sell a home or need property tax advice, reach out today!