Do L.A. Wildfire Victims Still Pay Property Taxes And Mortgages On Homes That Burned Down? Here's What You Need To Know

Wildfires have wreaked havoc across Los Angeles, leaving thousands of homes destroyed and families displaced. In addition to the emotional toll, many are left wondering what happens to their financial obligations. If your home was damaged or destroyed, do you still have to pay property taxes or your mortgage?

Property Taxes: Are You Still On the Hook?

As the LA Times reports, if your home was damaged or destroyed, the good news is that you can apply for temporary property tax relief. Los Angeles County offers a “Misfortune and Calamity” form that allows homeowners to request a reassessment. If your house is gone, its value will likely be reduced to zero. However, you're still required to pay taxes on the land.

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Here's the issue: Land in L.A. often makes up the majority of a property's assessed value, especially in high-value areas like Malibu and Pacific Palisades. That means you could still owe 60% or more of your original taxes even with a reduced tax bill. Critics argue it's unfair to tax unusable land, but for now, the law stands.

California's Proposition 8 allows for temporary tax reductions if your property value significantly decreases, but these reductions are only in place while your home is unlivable or damaged. Once you rebuild or the market recovers, your taxes will return to their previous levels.

What About Prop 13?

There’s some relief if you're worried about losing your Prop 13 tax base. Under current rules, you can rebuild up to 120% of your original home's value without triggering a reassessment. As a result, you can improve materials or add a bit more space without worrying about taxes going through the roof.

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Do You Still Have To Pay Your Mortgage?

Unfortunately, yes. Even if your home has been reduced to ash, your mortgage lender still expects you to pay. The only exception might be if you've paid off your mortgage entirely.

For those struggling to make payments, lenders often offer forbearance plans. These plans allow you to pause or reduce payments temporarily, but they're not a free pass. Interest accumulates during forbearance and you'll eventually have to repay it. This can sometimes result in higher overall costs due to compounding interest.

If you have homeowners insurance, your policy may help cover some mortgage payments while you wait for claims to be processed. Still, the process can take time and missed payments can lead to foreclosure if you're not proactive.

Rebuilding Challenges and Costs

Gov. Gavin Newsom has made it easier to rebuild a home after a wildfire by signing orders to speed up permits and control the prices of building supplies. While these measures aim to speed up recovery, many families find the cost of rebuilding too high. In such cases, selling the land and relocating may feel like the only viable option.

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Housing Market Impact

The wildfires have also shaken the housing market. According to a Redfin report, home purchases in fire-affected areas typically drop by 38% in the three years following a disaster, while nearby areas see a smaller dip of 3%. With more properties hitting the market – many as vacant lots – prices often decline, further complicating recovery efforts for homeowners looking to sell.

While temporary relief measures for property taxes and mortgage forbearance exist, these solutions often fall short of addressing the full scope of the financial burden. If you're affected, act quickly: file for reassessments, contact your lender and explore rebuilding or relocation options.

This information reflects current guidelines and may be subject to change. Always verify with local authorities and tax advisors for the most accurate and updated rules.

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