How California Property Taxes Work: Prop 13, 19, and Appeals

Here is how California property taxes work at the level that actually shows up on your bill: the county charges 1% of your property’s assessed value, plus any local bonds voters have approved, and that assessed value is locked in when you buy the home and can only grow by 2% a year after that. Most homeowners end up paying an effective rate between 1.1% and 1.25% once bonds are added in. Because your assessed value is tied to what you paid rather than what the home is worth today, two identical houses on the same street can carry very different tax bills.

The 1% Base Rate and Your Assessed Value

Article XIII A of the California Constitution caps the base property tax rate at 1% of a property’s full cash value.¹ “Full cash value” is not the price the home would fetch today. It is the market value at the time you bought the property or finished new construction on it, and that number becomes your base year value.

Each January, the county assessor increases your base year value by an inflation factor tied to the California Consumer Price Index. That increase can never exceed 2%. If inflation runs at 5%, your assessed value still moves up only 2%. If the CPI change is 1.4%, the assessor uses 1.4%. Your taxable value in any given year is the lower of that factored base year value or the property’s current market value.²

Local bonds sit on top of that 1% levy. Voters approve them to fund schools, infrastructure, and emergency services, and the totals vary by neighborhood. A property in a city with several active bond measures might pay a total rate near 1.25%, while a rural property with fewer bonds might come in closer to 1.05%.³ Your annual bill lists the general levy and each bond as a separate line item.

When the Clock Resets

The whole system reboots when the property changes hands or when new construction is completed. The assessor reappraises at current fair market value and sets a fresh base year.⁴ Remodel your home by adding a bedroom and only the value of that new construction gets added to your existing base. The original portion keeps its protected, lower number.

Annual bills are based on values as of January 1. When you buy or finish construction partway through the fiscal year, the county cannot wait until the next annual roll to capture the change. The assessor issues a supplemental assessment covering the gap between the old assessed value and the new market value for the remaining months.⁵

Timing decides how many supplemental bills you receive. A change of ownership or completed construction between January 1 and May 31 can trigger two supplemental bills, one for the current fiscal year and one for the year being prepared. A change between June 1 and December 31 triggers just one.⁶ These come as separate mailings from your regular annual statement, and new buyers who do not budget for them often get caught out in their first year.

When Payments Are Due

California property taxes are paid in two installments on a fiscal year that runs July 1 through June 30. The lien date for all taxable property is January 1.⁷

First installment: due November 1, delinquent after 5:00 p.m. on December 10.
Second installment: due February 1, delinquent after 5:00 p.m. on April 10.⁷

Miss either deadline and a 10% penalty is added to the unpaid amount immediately. If the second installment goes delinquent, an additional cost is added on top of that 10% penalty.⁸ Mailed payments count as timely only if the U.S. Postal Service postmark shows a date on or before the delinquency deadline.

Many homeowners pay through an escrow account with their mortgage lender. Federal law limits the cushion a servicer can hold in that account to roughly two months’ worth of estimated payments.⁹ Even when your lender handles the disbursement, verifying that they paid on time is on you. A lender’s missed payment still creates a lien on your property, not theirs.

What Happens If You Don’t Pay

Any secured property tax still unpaid at 5:00 p.m. on June 30 becomes tax-defaulted. From that point, penalties accrue at 1.5% per month on the original balance, and a redemption fee is added.⁸ You still hold legal title during the default period and can pay the balance at any time to clear the lien.

After five years of continuous default, the tax collector gains the power to sell the property at public auction. The collector records a Notice of Power to Sell Tax-Defaulted Property, and once that notice is recorded the sale can proceed.¹⁰ Your right to redeem ends at the close of business on the last business day before the sale begins. Five years feels like a long runway, but the monthly penalties compound, and the total owed by the time a sale notice arrives is often much larger than the original bill.

Exemptions That Lower Your Bill

Homeowners’ Exemption

If you live in your home as your primary residence, you qualify for the Homeowners’ Exemption, which reduces your assessed value by $7,000.¹¹ At a 1% base rate, that is roughly $70 a year. It does not apply to rental property, vacation homes, or dwellings under construction on the lien date. File a one-time claim with your county assessor, and you must be living in the home as of January 1.

Disabled Veterans’ Exemption

Veterans with a service-connected disability qualify for a much larger reduction. For 2026, the basic exemption removes $180,671 from the assessed value, and the low-income version removes $271,009.¹² Both figures are adjusted annually for inflation. The low-income version is available to veterans whose household income falls below a specified threshold, also adjusted each year.¹³ You must file a claim with the assessor’s office.

Moving or Inheriting: Proposition 19

Taking Your Base with You

Proposition 19 lets homeowners who are at least 55, severely and permanently disabled, or victims of a Governor-declared wildfire or natural disaster transfer their existing base year value to a replacement primary residence anywhere in California. This transfer can be used up to three times.¹⁴

There is no hard cap on the replacement home’s price, but the math still matters. If the replacement is worth more than the original at market value, the difference is added to your transferred base. A small cushion applies. Buy the replacement within a year of selling the original and it can cost up to 105% of the original’s market value with no upward adjustment; that threshold rises to 110% in the second year.¹⁵ Claims must be filed with the county assessor within three years of purchasing the replacement.

Parent to Child

Proposition 19 also narrowed the rules for passing property between parents and children without reassessment. Before Prop 19, parents could transfer a primary residence and up to $1 million in other real property to their children while preserving the low base year value. Now the child must use the inherited property as their own primary residence and file for a homeowners’ or disabled veterans’ exemption within one year of the transfer.¹⁵

Even when the child moves in, a value limit applies. The excluded amount equals the property’s factored base year value at the time of transfer plus $1,044,586 (the adjusted figure for transfers between February 16, 2025, and February 15, 2027). If current market value exceeds that combined figure, the excess is added to the transferred base, raising the child’s tax bill.¹⁵ Inherited investment properties and second homes no longer qualify for the exclusion at all, a major change for families who planned to pass down rentals.

When Your Home’s Value Falls

Proposition 8 Reductions

When the market drops, your home’s current market value can slip below its factored base year value. Proposition 8 entitles you to a temporary reduction in that situation. The assessor is supposed to review annually and enroll the lower of the factored base year value or current market value on the January 1 lien date.¹⁶

In practice, assessors do not always catch every decline, particularly in neighborhoods where sales are thin. If your market value has dropped below your assessed value and the assessor has not adjusted it, contact the county assessor’s office and request a review. Once a Prop 8 reduction is in place, the assessor reviews the property each year. When the market recovers and current value exceeds the factored base year value again, your assessment returns to the Prop 13 base and resumes the normal 2% annual growth cap.²

Assessment Appeals

If you disagree with your assessed value for any reason, you can file a formal application with your county’s Assessment Appeals Board. The regular filing window runs July 2 through September 15 in most counties, though counties on a different assessment calendar extend the deadline to November 30. Appeals can cover base year value, decline in value, or penalty assessments.¹⁷

Bring comparable sales data, an independent appraisal, or evidence of property defects that affect value. The board can lower your assessment, keep it the same, or in rare cases raise it, so confirm your evidence actually supports a lower number before filing. You must keep paying your taxes while the appeal is pending; any overpayment is refunded if the board rules in your favor.

Federal Deduction Cap

California property taxes are deductible as an itemized deduction on your federal return, but a cap applies. For the 2026 tax year, you can deduct up to $40,400 in combined state and local taxes, including property taxes, state income taxes, and sales taxes. The cap drops to $20,200 if you are married filing separately.¹⁸

For taxpayers with modified adjusted gross income above $500,000 ($250,000 if married filing separately), the $40,400 cap phases down. At the highest income levels the effective cap shrinks back to $10,000. The deduction only helps if your total itemized deductions exceed the standard deduction, so homeowners with modest property taxes and no mortgage interest may do better with the standard deduction anyway.

1
Justia. California Constitution Article XIII A Section 1 – Tax Limitation
2
California Legislative Information. California Revenue and Taxation Code 51
3
Contra Costa County, CA Official Website. Tax Rate Questions
4
Justia. California Constitution Article XIII A Section 2 – Tax Limitation
5
California State Board of Equalization. Supplemental Assessment
6
Los Angeles County Property Tax Portal. Supplemental Secured Property Tax Bill
7
Taxes. Property Tax Function Important Dates
8
Office of the Treasurer-Tax Collector, Riverside County, California. Secured Property Tax Billing and Due Dates
9
Office of the Law Revision Counsel. 12 USC 2609 – Limitation on Requirement of Advance Deposits in Escrow Accounts
10
California State Controller’s Office. County Tax Collectors Reference Manual – Chapter 5
11
LegiScan. California Revenue and Taxation Code 218 – Homeowners Property Tax Exemption
12
California State Board of Equalization. Disabled Veterans Exemption Increases for 2026
13
California Department of Tax and Fee Administration. Disabled Veterans Exemption
14
California State Board of Equalization. Proposition 19 – The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act
15
California State Board of Equalization. Proposition 19 Fact Sheet
16
California State Board of Equalization. Decline in Value – Proposition 8
17
California Legislative Information. California Revenue and Taxation Code 1637
18
Office of the Law Revision Counsel. 26 USC 164 – Taxes