~3 minute lesson · Beginner · Owning a Home
California property taxes and Proposition 13
The Short Answer
Understand assessed value, the base tax, and charges that can make a bill larger.
How It Works
Assessed value is not always market value
Proposition 13 generally limits the base property tax rate to 1% of assessed value, plus qualifying voter-approved debt. The factored base-year value generally grows by no more than 2% annually unless a reassessable change of ownership or new construction occurs. Exceptions and temporary value reductions can affect the calculation.
A purchase can reset the starting point
An ordinary purchase usually triggers reassessment to current market value. The seller’s historic bill may therefore be a poor estimate of the buyer’s future bill. Ask the county assessor about the parcel and the expected assessment; use the tax collector for billing and payment questions.
Read every line on the bill
Voter-approved debt, direct assessments, and special taxes can add to the base tax. Some properties have Mello-Roos community facilities district charges. Request the actual parcel bill and district disclosures, including possible increases. Multiplying a price by 1% alone does not capture every property’s annual cost.
California Example
A buyer should not use the seller’s current tax bill as the new owner’s estimate. Ask the county how a purchase and any local assessments may affect the bill.
What to Remember
- Assessed value is not always market value
- A purchase can reset the starting point
- Read every line on the bill
Estimate taxes for your purchase and parcel rather than copying the seller’s old bill.