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The Proposition 13 Value represents the maximum taxable value for your property. Since the passage of Proposition 13 in 1978, property is assessed at its fair market value as of the date it is acquired. Your purchase price generally becomes the taxable “base value” as of that date. From that point forward the taxable value of your property is limited to no more than a 2% increase per year.
2 For example, if you purchase a property which gets assessed at $500,000, the annual taxes would be based on $500,000 the first year, trended to $510,000 ($500,000 x 1.02) the second year, and trended to $520,200 ($510,000 x 1.02) the third year, etc. Also see example below. In a declining real estate market, the market value of your property may actually be lower than your trended base value. In this case, your property may qualify for a decline-in-value reassessment, temporarily reducing the taxable value to its current market value. Once granted, a decline-in-value reassessment is reviewed annually and may be further reduced, partially restored, or fully restored to its trended base value.
Example A property was purchased for $500,000. During a three-year period, the real estate market declined and recovered. The property owner filed for a decline-in-value reassessment. The following table shows the trended base value of the property, the market value of the property, and the assessed value of the property. Assuming a 2% annual consumer price index (CPI):
|
Trended Base Value |
Market Value |
Assessed Value |
| Year 1 |
$500,000 |
$500,000 |
$500,000 |
| Year 2 |
$510,000 |
$480,000 |
$480,000 |
| Year 3 |
$520,200 |
$510,000 |
$510,000 |
| Year 4 |
$530,604 |
$550,000 |
$530,604 |
In Year 1, the property’s purchase price reflected the market value and was assessed accordingly. In Year 2, the property was granted a temporary decline-in-value to reflect its current market value. In Year 3, the property was partially restored to reflect its rising market value. In Year 4, the property was fully restored to its trended base value (maximum taxable value) even if its market value was now actually higher. |
Under Proposition 13, base year values may not be increased more than two percent a year unless there is a change in ownership or new construction. However, if a property declined in value and was assessed under Proposition 8, if the value of a property rises, the taxable value can increase by more than two percent a year up to the annually adjusted base year value. When a property is assessed under Proposition 8, the Office of the Assessor is required to assess the property value every year.
Prior to the passage of Proposition 13, real property was appraised annually at its current market value, and there was no limitation on the tax rate that counties could apply.
All the cities and the County must notify the Assessor’s Office when ever building permits are issued. The Assessor’s Office also receives information about new construction from other sources.
No. If the building permit is for repair, replacement or maintenance, the value of the property will not be increased for tax purposes. However, if a bath, kitchen, or entire house is completely remodeled, the value will be added to the current assessment.
No. Only the value added of the new construction will increase the current assessment. For example, if you build a family room, only the value added of the new construction will be added to your current assessment. The existing home will not be reassessed for tax purposes.
A change in ownership occurs whenever any interest in real property is sold or transferred. The County Recorder then reports these sales and transfers to the Assessor’s Office. For more information click here
CHANGE OF OWNERSHIP REAPPRAISALS.
Yes. The only exceptions are transfers between husband and wife, and transfers between a parent and child. All other transfers, even among family members such as siblings, are reassessed.
No. Refinancing or the creation of a trust deed will not cause a reappraisal as long as there has been no change of title.
No. In this method of holding title, there is only a reassessment if there has been a change of beneficial interest or control. Revocable trusts such as living trusts are not reassessed.
Yes. Under this method of ownership, a reassessment occurs when there is a change in the controlling interest of a corporation. A controlling interest is defined as an interest greater than 50%.
Yes. The assessed value of property can be decreased when ever damage occurs such as fire, or when structures are removed. State law (Proposition 8, Temporary Reduction of Assessed Value For Property Tax Purposes, passed in 1979) also allows property values to be reduced if there is a decline in market values below the current assessed value.
Click here APPLICATION FOR REVIEW OF ASSESSMENT.
Proposition 13 also gives new homeowners long-term security by providing predictability in taxes. It establishes a uniform statewide property tax rate of 1%, with a 2% cap on future annual property tax increases. New buyers know exactly what their taxes will be next year, in five years, and in 30 years “” reassuring information for those who plan to live in their homes when they retire.
This is a common criticism “” and misunderstanding. Because Proposition 13 uses acquisition value (usually what the owner paid for the home) rather than the current market value as a basis of taxation, it is possible for owners of identical side-by-side properties to have significantly different tax bills. Those who have owned their property longer, often see that the current market value is much greater than the taxable value, which is limited to a 2% annual increase under Proposition 13.
Probably, if you are over 55 years old and staying within the same county. Maybe, if you are moving across county lines.
Proposition 60 allows seniors to transfer the base year value of their home when they sell that home and buy another in the same county, and meet other conditions specified in the law, including: (a) Both properties must be located in the same county and be eligible for the Homeowners’ Exemption; (b) You must be at least 55 years of age; (c) The replacement dwelling must be of equal or lesser value (sales price) than the original property; and (d) The replacement dwelling must have been acquired or newly constructed within two years of the sale of the original property.
Proposition 90 also extends the transfer of assessed valuation to those moving into other counties within the state. However, participation by each county is voluntary and few counties adopted Proposition 90, so it is important to check with the Board of Supervisors and County Assessor’s office in the county to which you plan to relocate before selling your present home and buying a new one.
Note that Propositions 60 and 90 provide only a one-time exemption. The claimant and/or claimant’s spouse or any co-owner must not previously have been granted the property tax relief provided by Section 69.5 of the Revenue and Taxation Code. For more information on Propositions 60 and 90 relating to the transfer of one’s property tax base from one home to another, click here PROP 60 & 90.
Yes! Proposition 58 allows the transfer of certain property between parents and children without reassessment. However, your children must file for the Proposition 58 exemption at the time of transfer. You can get complete information about Proposition 58 and the necessary forms from your local office of the County Assessor.
Proposition 193 allows the transfer of certain property between grandparents and grandchildren without reassessment. However, your grandchildren must file for the Prop. 193 exemption at the time of transfer. You can get complete information about Proposition 193 and the necessary forms from your local office of the County Assessor. For additional information on Propositions 58 and 193, leaving property so that family heirs are not burdened with a tax increase, click here PROP 58 & 193.
Your property tax bill consists of three separate categories of levies: General Tax Levy, Voter Approved Indebtedness, and Direct Assessments. Compare your current bill to last year’s bill and determine where the change is. It may be that a new bond or assessment appears on the bill this year that was not on the bill last year. (NOTE: Each county’s bill format is different; so yours may not show separate categories.)
That portion of the bill labeled “General Tax Levy” is the only amount controlled by Proposition 13, and this tax is limited to a maximum of 1% of the assessed value of your property (the “land” and “improvements”), and can be no more than 2% greater than the previous year’s tax bill.
The portion labeled “Voter Approved Indebtedness” is a levy to repay bonds approved by the voters. This amount varies greatly from county to county depending upon the number of local bond issues approved. Under current law, local general obligation bonds require a two-thirds majority vote to pass, except those for schools, which require only 55% voter approval.
The portion of the bill labeled “Direct Assessments” is now controlled by the HJTA sponsored Proposition 218. Assessments now require a majority “YES” vote of the property owners, with each owner voting the dollar amount of their assessment. Fees charged for the property-related services of sewer, water, and refuse collection can be imposed without a vote, but may not be greater than the cost of providing the service.
If you believe the Assessor’s valuation is incorrect, you should first call your local office of the County Assessor and discuss your valuation with an appraiser. If you cannot reach an agreement there, you should file an appeal with the Assessment Appeals Board in your county. Please note that there is a limited window of opportunity to file an appeal and be sure you meet the deadlines. For contact information for your County Assessor click here
Proposition 13 states that property is to go on the Assessor’s rolls at the full cash value ““ market value ““ at the time of purchase. This usually means the sales price resulting from a normal market transaction. Sometimes there are unusual circumstances, like the sale of a home on the market because of a foreclosure, that result in a sales price that the Assessor believes is less than the true market value. In this case the assessor’s valuation may prevail.
If you believe the Assessor’s valuation is incorrect, you should strongly consider an appeal because all future taxes will be based on the first-year value of your home. Call your local office of the County Assessor and discuss your valuation with an appraiser. If you cannot reach an agreement there, you should file an appeal with the Assessment Appeals Board in your county. Please note that there is a limited window of opportunity to file an appeal, and be sure you meet the deadlines. For contact information for your County Assessor, click here.
What you most likely received was a notice of intent to form an assessment district.
Thanks to Proposition 218, California property owners are better protected against assessments, fees, and other tricks used to raise taxes by calling them something else.
Prop. 218 requires that an agency seeking to establish an assessment district notify the owners of all property within the proposed district by mail. The notice of the proposed assessment must include a ballot, which the property owner completes and returns to the agency or its designated agent. Each property owner is voting the dollar amount of his/her assessment. Only the ballots that are actually returned can be counted, and a majority must be in favor for the assessment to be imposed.
Prop. 218 also gives you the ability to use the initiative process to reduce or repeal any tax, assessment, fee or charge. By collecting the signatures of 5% of the number of people in the local district who voted in the last election for governor, you can put any locally imposed levy to a vote.
Proposition 13 requires that real property be reappraised whenever a change in ownership occurs. When a transfer occurs, the assessor receives a copy of the deed and an appraisal is made to determine the new market value of the property. The property owner is then notified of the new assessment, and has the right to appeal the value if he does not agree with it.
The amount of the supplemental assessment is the difference between the prior assessed value and the new assessment on the property. This value is prorated, based on the number of months remaining in the fiscal year. Thereafter, the new owner pays the full tax based on the new assessed value. The previous owner is liable for the tax due up to the date of sale; the new owner is responsible for the tax after the date of sale. LINK TO SUPPLEMENTAL ASSESSMENTS
