In Washoe County, your property tax bill is payable in four increments with the final quarter for the 2022-23 tax year due March 6th. It makes me think that now is a good time to give you an overview of property taxes in northern Nevada and how it differs from our neighbors in northern California.
Property Tax 101
First, let’s quickly review property tax in general. Depending on where you live, they can be a minor cost or a fairly significant expense. On average, American households spend $2,690 annually on property taxes and every year, some 14 billion in property tax goes unpaid. Hawaii has the lowest property tax rate for any US state, at 0.29%, and Nevada isn’t far behind, coming in fourth lowest. The highest in America is New Jersey with a property tax rate of 2.47% whereas California comes in respectably at 16th lowest, according to Wallet Hub.
Calculating Property Taxes in Washoe County vs Northern California
Unlike California, the value of property taxes in Washoe County (AKA Reno and surrounding areas) isn’t assessed based on the sales price. They depreciate the value of the home and land and levy a tax on a portion of each. While the county assessor does take into account things like remodels and adding space, in general it does not move the needle significantly enough to break a budget. That individual depreciation also makes it near to impossible to give a buyer a simple formula to calculate for a property. Fortunately, the MLS listings post the tax rate and it can also be found on the Washoe county assessor’s website by address, name or parcel number if you have it.
In northern California, the sales price isn’t exactly how property taxes are assessed, but for calculation purposes it ends up being the primary factor and is good enough to budget with. For instance, in San Francisco the tax rate is set in the fall each year and is due twice a year (considered late with 10% penalties if paid after Dec 10 or April 10). The exception is the first year you buy, when you’ll get a one-time supplemental tax bill also with two pay-by dates. It’s a relatively basic calculation and I like to explain it as follows: if you buy a $800,000, home you need to set aside roughly $800/month for property taxes. If you buy a $2,000,000 home, plan on $2000 a month going towards property taxes. The big caveat is that you have to keep an eye out for sneaky bonds and Mello-Roos add ons which can add up significantly and can vary from neighborhood to neighborhood. That’s where a good local real estate agent is going to have your back by giving you an experienced set of eyes, so that you factor it into your budget ahead of any offer you make.
Back to Washoe county, where they base their calculations on the value of the land and depreciation of the home.
In Nevada, property taxes are calculated at .35 to come up with the taxable value. In Washoe County, the current tax rate is 3.66%. Here are some examples solely for a newly built home.
$1,460,803 (final price) X .35 = $511,281 (taxable value)
$511,281 (taxable value) X 3.66% (current tax rate) = $18,713 (a year)
$18,713 / 12 months = $1,559.42 (a month)
$1,000,000 X .35 = $350,000 taxable value
$350,000 taxable value x 3.66% current tax rate = $12,810 a year
$12,810 / 12 months = $1,067.50
Should People Consider Property Taxes When They Move?
Of the many, many considerations people make when they consider moving–price, commute, schools, local transportation, crime, recreation, walkability, environmental quality, government services, and the list goes on–property taxes and any bonds or special taxes definitely should be on the list. For a lot of people, property taxes determine affordability and certainly play into any cap rates in an investment property situation. Most people are sensitive to price, and there’s no question that property tax is a visible cost of homeownership.
Aside from your mortgage, and along with home owners insurance, property taxes are an ongoing recurring expense so keeping an eye out for them can save a lot of frustration when you start to get those bills. Have questions? Just ask! You know where to find me.