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Proposition 13

Proposition 13 was the ballot initiative approved by voters in 1978 that amended the California Constitution to place limits on property taxes. This amendment made the following changes to the property tax system:

  • Established base year values for real property assessments - 1978 base values were created using 1975 market value assessments;
  • Limited Assessment rate increases to a maximum of 2% per year;
  • Limited the property tax rate to 1% plus voter-approved bonds and indebtedness.

Taxable personal property assessments were not changed by this proposition, and continue to be valued annually on January 1.

Property Taxes before Proposition 13

Prior to 1978, real property was appraised cyclically, with no more than a five-year interval between reassessments. This system produced dramatic increases in property taxes. Property owners found it difficult to plan or budget for property taxes.

Tip

You may qualify to transfer your Proposition 13 tax base to your new home. Please visit our Lower My Taxes page for more information on the following base year value transfer options: Persons Over 55 and Severely and Permanently Disabled Persons-Prop. 110. You may also transfer your tax base between parents and children, or grandparents and grandchildren.

Proposition 13 Assessed Values

With the passage of this constitutional amendment, your property’s assessed value will be based on the lower of:

Factored Base Year Values Established by Proposition 13

Proposition 13 brought the concept of base year values into the property tax system. In 1978, base year values were established for all real property in California by setting each property's base to its 1975 market value assessment. Thereafter, a base year value could only be changed if a property was acquired (Change in Ownership) or new construction was completed.

  • Change in Ownership: If either a full or partial change in ownership occurred, an appraisal will be completed to determine the current fair market value of the property. This value will be used to establish a new base year value for both the land and improvements of the property. If only a partial change in ownership occurs, the original base year value is retained for the portion of ownership that remained the same, and a new base year value is established for the remaining portion.
  • New Construction: If new construction is completed, an assessment will be made establishing the current fair market value of the ‘new’ improvements. This value will be used to establish a new base year value for the improvement assessment. The base year value for the land typically remains unchanged for a new construction event. If the new construction is an addition, the original base for the land and improvements will remain, and a new base year value will be established for the completion of the addition.

Limits to Assessment Rate Increases
The base year value is adjusted each year for inflation. This adjustment can be no more than 2% per year. This value is adjusted for inflation and is called the ‘factored base year value’ or ‘Proposition 13’ value.

Annual adjustments to the base year value continue until there is an ownership change or new construction. When this occurs, the new assessed value is set to the market value of the property or new construction.

You may have an additional assessment increase for partially completed new construction on January 1. This value is temporary, and will not establish a permanent base year value until the project is complete.

Fair Market Value on January 1 Established by Proposition 8

Another Constitutional Amendment known as Proposition 8 allows the Assessor to temporarily lower assessments when the market value on January 1 is lower than the factored base year value. Each case is reviewed individually upon request by the property owner. Once this relief is provided, the Assessor is required to annually review and adjust the assessed value to the lower of market value or the factored base year value. Please review our Value Review page to learn more about this program.

If your property has previously qualified for a temporary decline-in-value reduction, your assessment may increase more than 2% per year to the lower of the factored base year value or the January 1 market value. Please review our Value Review page to learn more about how this can affect your assessment.

How Properties are Assessed under Proposition 13

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How Properties are Assessed Under Proposition 13

How to Estimate your Property Tax

The assessed value is the amount used to calculate your tax bill. Property taxes are calculated by multiplying the assessed value by the property tax rate of one percent.

Additional taxes may be approved for schools or other local projects through voter approved bonds or fees that raise the tax rate above one percent. These additional bonds or fees are determined by voters in each tax rate area.


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