Wildfires have devastated numerous homes, leaving many homeowners wondering what happens to their property taxes, mortgages, and even rental costs. In such a difficult time, it’s crucial to understand your financial obligations and the relief options available.

Property Taxes: Do You Still Have to Pay?

One of the most pressing concerns after losing a home in a wildfire is property taxes. Jeff Prang, the Los Angeles County Tax Assessor, has clarified that property taxes on damaged or destroyed homes will be reassessed.

Reduction in Property Assessment

A program called Misfortune and Calamity ensures that if a home is significantly damaged or destroyed, the assessed value of the structure (house, garage, or other outlying buildings) will be reduced. In the case of total destruction, the assessed value of the home becomes zero.

However, this reduction does not apply to the land on which the home was built. Since land values in areas like Malibu and Pacific Palisades are high, homeowners may still have a hefty property tax burden, despite their homes being destroyed.

Prop 13 Protections for Rebuilding

Many homeowners in California benefit from Proposition 13, which limits property tax increases. If your home is destroyed and you rebuild, you retain your original tax base, as long as your new home is not more than 120% of the original home’s value.

• If you rebuild the same house → Property taxes remain unchanged.
• If you upgrade (up to 120% of previous value) → No reassessment.
• If you exceed 120% → The additional value will be taxed at current market rates.

This allows homeowners to rebuild without a massive increase in taxes, as long as they stay within limits.

Do I have to pay my mortgage after a wildfire?

Many homeowners who lost their homes to wildfires are asking the crucial question: Do I still need to pay my mortgage?

The unfortunate answer is yes. Losing your home does not mean the mortgage disappears. A mortgage is a loan agreement, and destruction of the home does not cancel the debt.

Forbearance Options

There is some relief available through forbearance programs, which allow homeowners to temporarily delay mortgage payments. This does not mean loan forgiveness—interest continues to accrue, and the homeowner will still be responsible for the full amount later.

If you are in this situation, you should contact your mortgage servicer (the company handling your loan payments) immediately to explore deferred payment options. Some financial institutions may introduce special relief programs for affected homeowners due to the large-scale devastation caused by wildfires.

The Rising Cost of Renting After Wildfires

If your home was destroyed and you need to rent a temporary home, you may be facing skyrocketing rental prices. Price gouging laws prevent landlords from raising rent by more than 10% within 30 days of an emergency declaration. However, many previously vacant properties are returning to the market at much higher rates, often reflecting increased demand.

Homeowners needing to rent should check local laws to ensure they are not being overcharged. Additionally, with an influx of construction workers arriving to help rebuild, competition for rental homes is likely to remain high.

Final Thoughts

Recovering from a wildfire is a long and difficult process, but understanding your financial responsibilities can help you plan ahead.

• Property taxes can be reduced under the Misfortune and Calamity program, but land remains taxable.
• Prop 13 protections allow homeowners to rebuild without losing their low tax base if they stay within the 120% threshold.
• Mortgage payments must still be made, but forbearance may offer temporary relief.
• Rental costs may rise due to increased demand, but price gouging laws are in place to prevent excessive rent hikes.

For homeowners affected by wildfires, it’s crucial to reach out to tax officials, mortgage servicers, and rental authorities to ensure they are receiving all the relief they are entitled to.