Prop 13 Property Tax in California: How Your Tax Is Set After You Buy

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

Under Proposition 13, a California home’s base property tax is 1% of its assessed value, and the assessed value can rise by no more than 2% a year while you own it. When you buy, the county assessor resets the value to market value as of the purchase date, and that becomes your new base year value. Your actual bill is higher than 1% because voter-approved debt and per-parcel direct charges are added on top.

This guide explains the base rate and add-ons, the 2% cap, what triggers reassessment, the homeowners’ exemption, supplemental bills and decline-in-value reviews, with links to official sources.

The 1% rate and what gets added

Voters approved Proposition 13 on June 6, 1978. According to the State Board of Equalization’s Publication 29, California Property Tax: An Overview (March 2025), the general tax rate is capped at 1% of taxable value. Amounts needed for certain bonded debt are allowed on top of that:

• Debt approved before Proposition 13 took effect.
• Bonds to buy or improve real property approved by two-thirds of voters after July 1, 1978.
• School facilities bonds approved by 55% of voters.

These voter-approved rates vary by tax rate area, so two homes in the same county can have different total rates. Separate from the rate are direct charges: special taxes, Mello-Roos community facilities district taxes, assessments and service fees billed per parcel rather than by value. Mello-Roos taxes are explained in our Buying Process guide on community facilities districts. Before you write an offer, ask for the seller’s current secured tax bill and read every line.

Base year value and the 2% annual cap

Your base year value is the property’s fair market value as of the 1975 lien date, or as of a later purchase, change in ownership or completed new construction (Publication 29). Each year the assessor may raise that value by inflation, up to 2%.

The Board of Equalization announces each year’s inflation factor. For the 2026 lien date (the 2026–27 roll), the California Consumer Price Index rose 3.307% from August 2024 to August 2025, but the statutory cap held the factor to 1.02, or 2% (BOE Letter to Assessors No. 2026/002, January 13, 2026). When inflation is under 2%, the factor is lower. Check the current year’s letter before you budget.

Hypothetical example. You buy for $900,000 and that becomes the base year value. The next year’s maximum assessed value is $918,000 at a 1.02 factor. The 1% base tax goes from $9,000 to $9,180, before voter-approved debt, direct charges and any exemption. These numbers are illustrative, not a quote for any parcel.

What triggers reassessment

Change in ownership

The BOE notes that gifts, inheritances and transfers into or out of some trusts can count as a change in ownership, even with no money changing hands. If only part of the property is transferred, only that share is reappraised. A buyer files a Preliminary Change of Ownership Report (BOE-502-A) with the deed. The recorder may charge a $20 fee if it isn’t filed at recording.

For family transfers and moving a base year value to a replacement home, see our guides to the Prop 19 base year transfer and Prop 19 for inherited homes.

New construction

Per the BOE, completion is generally the assessable event. If work is unfinished on January 1, the assessor values it as it stands each lien date until it is done. Some exclusions require you to notify the assessor within 30 days of starting or finishing work. Sacramento County, for example, requires notice before completion or within 30 days after for a seismic retrofit claim (form BOE-64). Excluded improvements generally get assessed after the next change in ownership. Adding a second unit is new construction; see buying a home with an ADU.

The homeowners’ exemption

The homeowners’ exemption reduces the taxable value of an owner-occupied principal residence by $7,000. The home must be your principal residence on the January 1 lien date. You file form BOE-266 once with the county assessor. To get the full exemption for a year, first-time filers must file by February 15. At the 1% base rate, $7,000 of value equals $70 of base tax; the actual saving depends on your total rate. Tell the assessor if you stop qualifying. December 10 is the last day to end the exemption without penalty.

Supplemental bills after you buy

The regular bill runs on the July–June fiscal year and is based on the January 1 value. When a purchase or completed construction changes the value mid-year, the assessor issues a supplemental assessment. Publication 29 describes it as a prorated amount for the rest of the fiscal year: an increase produces a supplemental bill, and a decrease produces a refund. Our supplemental tax bill guide explains timing and who pays.

When market value drops: Prop 8 reviews

Under Proposition 13, taxable value is the lower of the factored base year value and market value on January 1. The Sonoma County Assessor explains that it can temporarily lower a value when market value falls below the factored base. It reviews the value every January 1. When the market recovers, the value is restored but never above the factored base year value. Owners who disagree can file an Application for Changed Assessment with the Assessment Appeals Board; Sonoma County’s filing period runs July 2 through November 30. Filing periods differ by county, so check your county assessor or appeals board.

For a current opinion of market value, request a home valuation.

What this means for buyers in Diamond’s counties

• Budget from the purchase price, not the seller’s bill. A long-time owner’s bill reflects an older base year value. Estimate 1% of your price, then add the voter-approved rate and direct charges from the current bill.
• Read the direct charges. Parcels in newer subdivisions may carry CFD special taxes, and rural parcels may carry fire, water or other district charges; the bill lists each one with a contact. Our Sonoma County and Napa County buyer guides cover local costs.
• Investors. Prop 13 applies to rentals and commercial property too, but Prop 19’s parent-child exclusion does not cover commercial property. See our property tax guide for investors.
• Transfer tax is separate. Documentary transfer tax is paid at closing, not on the annual bill; see California transfer tax.

Questions people ask

Is California property tax always 1%?

The base rate under Proposition 13 is 1% of assessed value. Your total bill is usually higher because voter-approved bonded debt is added to the rate and direct charges such as special taxes and assessments are added per parcel.

How much can my assessed value go up each year?

By the inflation factor, capped at 2% a year. For the 2026–27 roll, the BOE set the factor at 1.02, the maximum.

Does adding someone to title trigger reassessment?

Adding a spouse is excluded. Adding someone else to title can count as a change in ownership for the share transferred, though the BOE lists some joint tenancy situations as excluded. Check with the county assessor before you record any new deed.

Will remodeling raise my taxes?

Only the newly built portion is assessed, at its market value, and normal maintenance and repair generally is not new construction. Some work, such as qualifying seismic retrofits, fire sprinklers and active solar systems, may be excluded if you file on time.

How do I get the homeowners’ exemption?

File form BOE-266 with your county assessor once the home is your principal residence. File by February 15 for the full exemption that year. It is a one-time filing.

Why did I get a second tax bill after closing?

That is a supplemental bill for the difference between the prior owner’s assessed value and your new base year value, prorated for the rest of the fiscal year.

Can my assessed value go down?

Yes. If market value on January 1 is below your factored base year value, the assessor may enroll the lower value temporarily, or you can request a review or file an appeal within your county’s filing period.

Sources & notes

1. California State Board of Equalization, Publication 29: California Property Tax, An Overview (March 2025): 1% rate, bonded debt exceptions, base year value, 2% cap, supplemental assessments.
2. BOE Letter to Assessors No. 2026/002: 2026–27 California Consumer Price Index: 1.02 inflation factor for the 2026 lien date.
3. BOE: Change in ownership FAQs: reassessment, exclusions, PCOR.
4. BOE: New construction: what counts, exclusions, completion timing.
5. BOE: Homeowners’ exemption: $7,000 reduction, BOE-266, February 15 deadline.
6. Sacramento County Assessor: New construction exclusions: filing steps for seismic, solar, accessibility and other exclusions.
7. County of Sonoma Assessor: Decline in value: Prop 8 reviews and appeal period.

The inflation factor changes every year; check the BOE’s current letter. Exemption and appeal deadlines are set by statute and county, so confirm them with your county assessor.

General information, not legal, tax or lending advice. Updated November 2026. Primary sources are linked in this guide.

Related: Prop 19 base year transfer · Supplemental tax bills · Buy with Diamond