Proposition 13 affects your California property taxes in three main ways: it caps the base tax rate at 1% of your property’s assessed value, limits annual increases in that assessed value to 2%, and locks your assessment to your purchase price until the property changes hands or you build something new. The result is a bill tied to what you paid for the home, not to what it would sell for today.1Justia. California Constitution Article XIII A Section 1 – Tax Limitation
The One Percent Base Rate
Article XIII A of the California Constitution sets the maximum ad valorem tax on real property at 1% of its full cash value.1Justia. California Constitution Article XIII A Section 1 – Tax Limitation “Full cash value” generally means the market price at the time you bought the property, or the value shown on the 1975–76 tax bill if you have owned the home since before 1976.2California Legislative Information. California Constitution – Article XIII A – Tax Limitation
That 1% is only the base. Voter-approved bonds for schools and local infrastructure add to the total, typically pushing the effective rate to somewhere between 1.1% and 1.25% of assessed value, depending on where you live.3California State Board of Equalization. California Property Tax An Overview A property assessed at $600,000 in an area with a 1.2% effective rate would owe roughly $7,200 a year before exemptions.
If the property is your primary residence, you can file a one-time claim with your county assessor for the homeowners’ exemption, which knocks $7,000 off the taxable value. At the base rate, that is about $70 off your annual bill.4California State Board of Equalization. Homeowners’ Exemption
The Two Percent Annual Cap
Once your base year value is set, your assessed value can rise by no more than 2% per year, no matter what the housing market does. The actual yearly adjustment is the lesser of 2% or the change in the California Consumer Price Index for your area, so in low-inflation years the increase comes in under the cap.5Justia. California Constitution Article XIII A Section 2 – Tax Limitation
This is where long-term owners pull far ahead of their neighbors. A homeowner who bought for $200,000 in 1995 might carry an assessed value around $360,000 today while the house next door sells for $900,000. Two identical homes on the same street can produce property tax bills that differ by thousands of dollars, purely based on when each owner bought.
What Triggers a Reassessment
Two events reset your assessed value to current market price: a change in ownership and the completion of new construction. When you buy, the county assessor determines fair market value as of the transfer date, and that figure becomes your new base year value. The 2% cap then restarts from that number.2California Legislative Information. California Constitution – Article XIII A – Tax Limitation
New construction triggers reassessment only on the new portion. Add a bedroom or build an ADU, and the assessor values that improvement at market price and adds it to your existing base year value. The original structure keeps its old number.6California State Board of Equalization. Supplemental Assessment
Changes in ownership include sales and gifts, but also transfers people often do not expect to count, such as moving property into certain trusts or transferring a majority interest in a legal entity that owns real estate. The January 1 lien date each year is the reference point: your property’s status and value on that date set the taxes for the fiscal year starting the following July 1.
The Supplemental Bill After You Buy
Nearly every new buyer gets surprised by this one. When you purchase a home or finish new construction, the assessor issues a supplemental assessment covering the difference between the old assessed value and your new market value, prorated for the months left in the fiscal year. The supplemental bill arrives separately from your regular annual bill, and both must be paid.6California State Board of Equalization. Supplemental Assessment
Close escrow in October and you owe for about eight months of the value difference. Close in March and you may receive two supplemental bills: one for what remains of the current fiscal year and a second for the full upcoming year starting July 1.6California State Board of Equalization. Supplemental Assessment Supplemental bills carry their own delinquency dates, and penalties for late payment cannot be excused because your mortgage lender failed to pay from escrow. If you bought a property worth substantially more than its prior assessment, the supplemental bill can run into thousands.
Inheritance and Senior Moves Under Proposition 19
Proposition 19, passed in November 2020, rewrote two of Prop 13’s most-used carve-outs.7California State Board of Equalization. Proposition 19 Fact Sheet
Parent-Child and Grandparent-Grandchild Transfers
Before Prop 19, parents could pass almost any property to their children without reassessment, including rentals and second homes. The exclusion now applies only when the child (or grandchild, if both parents are deceased) uses the inherited property as a primary residence. Even then, if the market value at transfer exceeds the parent’s assessed value by more than a set threshold, the excess is added to the child’s assessed value.8California State Board of Equalization. Proposition 19 Intergenerational Transfer Exclusion Guidance Questions and Answers
The threshold adjusts periodically. For transfers between February 16, 2025, and February 15, 2027, it is $1,044,586.7California State Board of Equalization. Proposition 19 Fact Sheet If a parent’s assessed value is $300,000 and the home transfers at a $1,200,000 market value, the $900,000 gap falls under the threshold, so the child keeps the $300,000 base. If the gap were larger than the threshold, only the overflow would be added. The child has to file a homeowners’ exemption claim on the property within one year of the transfer to preserve the exclusion.
Base Year Transfers for Seniors, Disabled Owners, and Disaster Victims
Homeowners 55 or older, severely disabled owners, and victims of wildfires or natural disasters can carry their existing base year value to a replacement home anywhere in California, up to three times. If the replacement costs the same as or less than the original home’s sale price, the old base year value transfers straight across. “Equal or lesser value” means 100% of the original sale price if you buy before selling, 105% if you buy within the first year after selling, and 110% in the second year. Anything above the equal-or-lesser threshold gets added to the transferred base. You have two years from the sale of the original to buy or build the replacement, and the original must have been your primary residence.9California State Board of Equalization. Proposition 19
When the Market Drops Below Your Assessment
Prop 13’s 2% cap helps when values rise, but the system also adjusts downward. Under the 1978 amendment commonly called Proposition 8, your assessed value must be set at the lower of your factored base year value or the current market value as of the January 1 lien date.10California State Board of Equalization. Decline in Value – Proposition 8
If your home’s market value falls below its assessed value, the assessor is supposed to reduce the assessment. Many assessors do this on their own during broad downturns, but you can also request a review. Once a property is in decline-in-value status, it must be reappraised each year. As the market recovers, the assessed value can rise by more than 2% annually, but it can never exceed your original Prop 13 value adjusted upward by the annual inflation factor. Once market value climbs back above that line, the normal 2% cap takes over again.10California State Board of Equalization. Decline in Value – Proposition 8
Appealing an Assessment You Think Is Too High
If your assessed value looks higher than what the property would sell for, you can file a formal appeal with the Assessment Appeals Board in the county where the property sits. The Application for Changed Assessment comes from your county’s Clerk of the Board.11California State Board of Equalization. Assessment Appeals Process – Sample Forms You will need your Assessor’s Parcel Number from your tax bill and your opinion of the property’s market value as of the January 1 lien date. The strongest evidence is comparable sales: recent sales of similar homes nearby, matched on square footage, lot size, age, and condition, that closed near the valuation date. Photos of deferred maintenance or structural problems also help.12California State Board of Equalization. Assessment Appeals Frequently Asked Questions
The regular filing window opens July 2 each year. In counties that mail assessment notices to all owners by August 1, the deadline is September 15. In counties that do not, you have until November 30 (or the next business day if that date falls on a weekend).13California State Board of Equalization. Letter No. 2025/020 – County Assessment Appeals Filing Period for 2025 Some counties charge a filing fee; check with your Clerk of the Board.12California State Board of Equalization. Assessment Appeals Frequently Asked Questions
Then expect to wait. The appeals board has up to two years to hear and decide your case, and many counties run close to that limit.14Orange County Clerk of the Board. FAQs You will get a hearing notice at least 60 days before the date. During the wait, the assessor’s office may offer a stipulated agreement on a revised value. If the proposed number matches what your comparable sales support, accepting it is usually the fastest route to a lower bill.