If you're a disabled Veteran buying or already owning a home in California, there may be a property tax benefit you're not taking advantage of.California's Disabled Veterans' Property Tax Exemption can reduce the taxable assessed value of a qualifying Veteran's primary residence, potentially saving thousands of dollars in property taxes over time.And for military families evaluating whether homeownership makes financial sense, that's a benefit worth understanding.
Who qualifies?
The exemption is generally available to qualifying Veterans who have a service-connected disability and:• Have been rated 100% disabled by the U.S. Department of Veterans Affairs, or• Are being compensated at the 100% rate due to individual unemployabilityCertain Veterans with qualifying loss of limbs or blindness may also qualify, and an unmarried surviving spouse of a qualifying Veteran may be eligible under certain circumstances.The home must generally be the claimant's principal place of residence.How much is the exemption?
California offers two levels of the Disabled Veterans' Exemption:Basic exemption: Available to qualifying disabled Veterans regardless of household income.Low-income exemption: Provides a larger exemption for qualifying households whose income falls below the state's annual threshold.These dollar amounts aren't static. California adjusts the exemption amounts and low-income threshold annually for inflation.And here's an important distinction:The exemption doesn't simply give you a check or credit for that amount.It reduces the assessed value of your home that is subject to ad valorem property taxation.For example, if your home has an assessed value of $600,000 and you qualify for a $180,000 exemption, your applicable property taxes would generally be calculated using approximately $420,000 of taxable assessed value instead of the full $600,000.That's where the savings come from.Does this mean a disabled Veteran pays zero property taxes?
Not necessarily.You'll sometimes hear this benefit described as “disabled Veterans don't pay property taxes,” but that's an oversimplification in California.If the qualifying exemption is large enough relative to the home's assessed value, it could eliminate the ad valorem property tax portion of the bill.But California property tax bills can contain more than taxes based on assessed value.You may still see charges such as:• Special assessments• Special taxes• Direct levies• Mello-Roos• Certain local bonds or district chargesThe Disabled Veterans' Exemption generally applies to ad valorem property taxes, not these additional charges.That's why two Veterans with similarly priced homes could still have different tax bills.Your location matters
California establishes the Disabled Veterans' Exemption at the state level, but property taxes are administered locally through county assessors.Your actual tax savings will depend on factors such as:• Your home's assessed value• Which exemption level you qualify for• Your local tax rate• Special assessments or direct levies attached to the property• Whether the property is located within a Mello-Roos or other special tax districtThis is particularly important when comparing homes in different Bay Area cities and counties.The purchase price isn't the only number that matters. Two similarly priced properties in different communities can have different ongoing tax obligations.Before purchasing, I recommend looking at the actual tax characteristics of the specific property rather than assuming a blanket percentage.How do you claim the exemption?
The exemption isn't something I would assume will automatically appear on your property tax bill.Qualifying homeowners file a Claim for Disabled Veterans' Property Tax Exemption (BOE-261-G) with the assessor in the county where the property is located.Timing matters.California has filing deadlines that affect whether you receive the full exemption for the applicable year, so this isn't something I'd recommend putting off after purchasing a home or receiving a qualifying VA disability determination.For the basic exemption, you generally don't need to reapply every year once it has been granted, as long as you and the property remain eligible.The low-income exemption does require annual filing because the county needs to confirm that you continue to meet the applicable household income requirement.Don't forget about this when calculating your housing budget
This is the part I think military buyers sometimes miss.When determining whether you can afford a home, don't look only at:Purchase price + mortgage payment.Your actual monthly housing expense can include principal, interest, property taxes, homeowners insurance, HOA dues and other property-specific expenses.If you qualify for the Disabled Veterans' Exemption, your property tax obligation may look significantly different from the standard estimate shown on a mortgage calculator.That can affect your overall monthly housing cost and should be considered when you and your lender are running the numbers.Your military benefits extend beyond the VA loan
As a military wife and REALTOR®, this is one of the reasons I'm passionate about making sure military families understand the benefits available to them.We talk a lot about the VA loan, and rightfully so.But your VA loan isn't necessarily the only military-related benefit that can affect the economics of homeownership.For a qualifying disabled Veteran, understanding the property tax exemption could make a meaningful difference in the long-term cost of owning a home.And because the exemption is administered through your local county assessor and individual tax bills can contain additional local charges, always verify your specific eligibility, exemption amount and estimated tax liability with the county assessor for the property you're considering.Don't leave an earned benefit on the table simply because no one told you it existed.Evangeline Nguyen, REALTOR®eXp RealtyCA DRE #02210833Serving San Francisco, San Jose, East Bay, Fairfield & Monterey