California property tax laws start from a single number: 1% of assessed value. That cap was set by Proposition 13 in 1978, and annual increases in your assessed value are limited to 2%. What most homeowners actually pay is somewhat higher once voter-approved bonds and local special assessments are added, and the whole system resets when a property changes hands.
The 1% Base Rate
Article XIII A of the California Constitution caps the general ad valorem property tax at 1% of a property’s full cash value.1California Legislative Information. California Constitution Article XIII A – Tax Limitation Full cash value generally means the purchase price at the time you buy. That number becomes your base year value, and every future bill is calculated from it.
The 1% cap covers only the general levy. Voter-approved bond debt sits outside it. School construction bonds passed with 55% approval add separate charges, as does bonded indebtedness approved by two-thirds of voters for other public improvements.1California Legislative Information. California Constitution Article XIII A – Tax Limitation Once those are layered on, most homeowners pay an effective rate between 1.1% and 1.5%.
The 2% Annual Growth Limit
Your assessed value cannot rise by more than 2% per year, tied to the Consumer Price Index for your area. When CPI comes in below 2%, the increase is limited to the actual inflation rate.2Justia. California Constitution Article XIII A Section 2 – Tax Limitation A home assessed at $500,000 cannot be assessed above $510,000 the following year. This limit continues year after year as long as ownership does not change, which is why an owner who bought in 1990 may have an assessed value far below current market value.
Assessed value can drop too. If the property is damaged or the local market declines, the assessor is required to reduce the assessed value to reflect the loss.
What Triggers a Reassessment
Two events reset your tax base: a change in ownership and new construction. California law defines a change in ownership as a transfer of a present interest in real property where the value transferred is substantially equal to the property’s full value.3California Legislative Information. California Revenue and Taxation Code Section 60 – Change in Ownership and Purchase A sale is the common example, but some trust transfers, corporate restructurings, and lease arrangements can also qualify.
When a change in ownership occurs, the base year value resets to current fair market value. For a home last sold in 2005, the jump can be large. That is why a buyer’s tax bill often dwarfs what the seller had been paying.
New construction works differently. Adding a pool, a bedroom, or a garage does not wipe out your base year value. The assessor determines the fair market value of the new improvement only and adds it to the existing assessed value.4California Department of Tax and Fee Administration. New Construction Routine maintenance and cosmetic work generally do not trigger reassessment.
Supplemental Tax Bills After You Buy
New buyers are often surprised by supplemental bills that arrive months after closing. When a change in ownership or new construction triggers reassessment, the county issues a supplemental assessment covering the period from the first of the month after the event through the end of the fiscal year on June 30.5California State Board of Equalization. Supplemental Assessment
Timing determines how many bills you get. A change in ownership between June 1 and December 31 produces one supplemental bill for the rest of the current fiscal year. A change between January 1 and May 31 produces two bills: one for the current fiscal year and one covering the entire next fiscal year.5California State Board of Equalization. Supplemental Assessment These are separate from your regular annual bill and carry their own deadlines. Missing them triggers a 10% penalty.
Proposition 19 and Family Transfers
Proposition 19, phased in starting in 2021, rewrote two areas of the law: base year value portability for older and disabled owners, and the rules for transfers between family members.
Transferring Your Base Year Value to a New Home
Homeowners who are 55 or older, severely disabled, or victims of a wildfire or natural disaster can transfer their base year value to a replacement home anywhere in California, up to three times.6California State Board of Equalization. Proposition 19 Before Proposition 19, the transfer was mostly limited to the same county and could be used only once.
If the replacement home costs the same or less than what the original sold for, the base year value transfers in full. “Equal or lesser value” is defined on a sliding scale: 100% of the original sale price if you buy first, 105% within the first year after selling, and 110% within the second year.6California State Board of Equalization. Proposition 19 If the replacement home costs more, you still get the transfer, but the difference between the two prices is added to your transferred base year value. Claims must be filed within three years of the purchase for retroactive relief.
Parent-Child and Grandparent-Grandchild Transfers
This is where Proposition 19 took away a benefit many California families had relied on. Before February 16, 2021, parents could transfer a primary residence to a child without reassessment regardless of value, and could transfer up to $1 million in other real property the same way. That broad exclusion is gone.
Under current rules, a parent-child transfer avoids reassessment only if the child uses the property as their own primary residence and files for the homeowners’ exemption within one year of the transfer. Even then, the exclusion is capped: the child keeps the parent’s base year value only up to that base year value plus $1,044,586 (the figure for transfers between February 16, 2025, and February 15, 2027). Value above that gets reassessed.7California State Board of Equalization. Proposition 19 Fact Sheet Rental properties and vacation homes inherited from parents face full reassessment with no exclusion. The same rules apply to qualifying grandparent-grandchild transfers where the grandchild’s parent has died.
Mello-Roos and Other Add-Ons
Beyond the base 1% and voter-approved bonds, many homeowners pay Mello-Roos taxes. The Mello-Roos Community Facilities Act of 1982 lets local governments create special districts that levy additional taxes to fund infrastructure such as roads, sewers, parks, and schools.8California Legislative Information. California Government Code Section 53321 – Proceedings to Create a Community Facilities District These charges are secured by a lien on every non-exempt parcel in the district and appear as separate line items on your bill.
Mello-Roos is common in newer subdivisions, where developers set up districts to pay for the infrastructure supporting the development. The amounts vary widely by neighborhood. Unlike the base tax, Mello-Roos is not tied to assessed value; charges are typically flat, or based on lot size or square footage under a formula fixed when the district was created. If you are buying in a newer community, ask for the total tax rate including Mello-Roos before assuming the 1% base rate tells the whole story.
Payment Deadlines and Penalties
Property taxes are collected in two installments. The first is due November 1 and delinquent after December 10. The second is due February 1 and delinquent after April 10.9California Department of Tax and Fee Administration. Property Tax Function Important Dates When a deadline falls on a weekend or holiday, the delinquency date moves to the next business day. Postmark controls if you pay by mail; a December 11 postmark on the first installment is late.
A late first installment triggers a 10% penalty. A late second installment triggers a 10% penalty plus a cost charge. If neither installment is paid by June 30, the property goes into tax-defaulted status and a redemption penalty of 1.5% per month begins accruing. After five years in default, the county can initiate a sale to recover the unpaid taxes.
Exemptions Worth Knowing About
Homeowners’ Exemption
If you own and occupy a home as your primary residence, you can claim a $7,000 reduction in assessed value. At the 1% base rate, that is about $70 a year. File once, and it stays in place until you move or the property no longer qualifies. Rentals, vacation homes, and properties where the owner claims a veterans’ exemption instead are not eligible.10California Legislative Information. California Revenue and Taxation Code Section 218 – Homeowners Property Tax Exemption
Disabled Veterans’ Exemption
Veterans rated 100% disabled or unemployable due to a service-connected condition qualify for a much larger exemption. For the 2026 assessment year, the basic exemption reduces assessed value by $180,671, and the low-income version reduces it by $271,009.11California State Board of Equalization. Disabled Veterans Exemption Increases for 2026 The basic exemption requires a one-time filing. The low-income version, which has a household income threshold, must be renewed annually by February 15. This exemption replaces both the homeowners’ exemption and the standard veterans’ exemption, so claim whichever gives you the greatest benefit.12California Department of Tax and Fee Administration. Disabled Veterans Exemption
Property Tax Postponement for Seniors and Disabled Homeowners
California’s Property Tax Postponement program lets eligible homeowners defer their taxes, with the state placing a lien on the home. To qualify, you must be at least 62 years old, blind, or disabled, own and occupy the home as your primary residence, have total household income of $55,181 or less, hold at least 40% equity, and not have a reverse mortgage.13State Controller’s Office. Property Tax Postponement Fact Sheet
Deferred taxes accrue simple interest at 5% per year. The balance comes due when the homeowner moves, sells, or dies, at which point the state collects from the sale proceeds or the estate.13State Controller’s Office. Property Tax Postponement Fact Sheet The interest adds up: over ten years, a $5,000 annual bill would generate roughly $13,750 in deferred interest on top of $50,000 in deferred taxes.
If You Think Your Assessment Is Too High
You can file a formal appeal with the Assessment Appeals Board in the county where the property is located. The standard filing period runs from July 2 through September 15 in counties where assessment notices go out by August 1. Counties that mail notices later extend the deadline to November 30, or the next business day if that falls on a weekend.14California State Board of Equalization. County Assessment Appeals Filing Period for 2025
The appeal is filed on the Assessment Appeal Application, available from the Clerk of the Board in your county or on the Board of Equalization’s website.15California State Board of Equalization. Property Tax Forms for Use by County Assessors Offices and Local Boards State the value you believe is correct and be ready to support it with comparable sales, an independent appraisal, or documentation of defects affecting value. Many counties also offer informal review with the assessor’s office before a formal hearing, which is often faster and worth trying first.
Filing an appeal does not delay your payment obligation. Pay the taxes as billed. If the appeal results in a lower assessed value, the county issues a refund for the overpayment.
Decline-in-Value Reductions
When the market falls, your assessed value should fall with it. Under Proposition 8, the county assessor is required to enroll the lesser of your factored base year value or the property’s current market value as of the January 1 lien date each year. Assessors often review values proactively during downturns, and you can file an appeal if you think your property’s market value has dropped below its assessed value. Once the market recovers, the assessor can raise the assessed value by more than 2% per year until it climbs back to the factored base year value, but it will not exceed that ceiling unless a new change in ownership or construction event occurs.16California State Board of Equalization. Decline in Value – Proposition 8