Santa Monica is one of the most expensive neighborhoods in California, but many are surprised to find that the property tax rate is lower than expected. However, a low rate does not necessarily mean a light burden.

Santa Monica is part of LA County, and with the Prop 13 base tax rate of 1 percent, additional city bonds and school assessments bring the effective tax rate at the time of purchase to about 1.18 to 1.22 percent. The average effective tax rate for all of LA County is around 0.82 percent, but due to additional city assessments, it is realistic to expect a slightly higher rate in Santa Monica.

The median home price in Santa Monica is around $1.7 million. Applying a rate of 1.2 percent results in an annual property tax of about $20,400, but in reality, it often falls between $19,500 and $21,500.

Insurance premiums have risen significantly in recent years. While Santa Monica itself is relatively safe due to its coastal location, the wildfire risk from the nearby Santa Monica Mountains and Pacific Palisades has contributed to a tightening of the California insurance market, leading to annual premiums ranging from $2,200 to $2,500. Some properties have even faced renewal refusals from major insurers, resulting in a switch to the FAIR Plan.

Considering the proportion of homes built between the 1920s and 1960s, maintenance costs can be estimated at about 1.25 percent, requiring approximately $21,250 annually. If you choose a condo, you will also need to budget for HOA fees, which typically range from $500 to $800 per month.

Simply adding these three items results in an annual cost of between $43,000 and $45,000. When HOA fees are included, you could be looking at nearly $4,000 in fixed costs each month, making it essential to simulate this aspect in addition to your mortgage repayment capacity.

Nearby Pacific Palisades and Malibu often have much higher insurance premiums due to greater wildfire risks. In contrast, areas further inland in West LA tend to have a somewhat lighter insurance burden compared to Santa Monica.

If you are a Korean household, applying for the Homeowners Exemption is a must, and if you are over 65, it is advisable to consult a tax professional to see if you can transfer the tax benefits of your existing undervalued home to a new one using Prop 19.