Proposition 13- Real Property

Thanks for coming to our site to get some Proposition 13 information. We hope you can find the answers to all your questions below. If not you might also check out our Prop 13 FAQ

We are happy to personally discuss any specific issues or questions via email or phone.

We here at Tax Appeal Consultants are passionate about Property Tax Issues, Property Tax Appeals, and Reductions. If you are looking for information about Proposition 13 chances are you are concerned about your property taxes. If your Commercial or Residential property is located in Southern California we would like the chance to work with you.

If your Property Taxes are too high (do you know?), or the value of your property has gone down, then you might have a good chance to receive a Property Tax Reduction. To find out if you qualify Click here to start a Free Property Tax Reduction evaluation (you will be taken to a form to enter information for us to review your situation)

Or call today, we’re waiting to help you. With 25+ years of Property Tax Knowledge, Experience, and Excellent Service we can save you money on your Property Taxes. We’ve helped thousands of happy satisfied customers who used our easy “no stress” service. We never charge any upfront fees. We also offer a free evaluation and we’re paid through contingency fees.  So if we’re not successful in our work getting your property taxes reduced, you don’t pay.

Click here to start a Free Property Tax Reduction evaluation

Click here to check out our 5 star Yelp reviews

Click here to get the current Southern California Assessment Appeals Filing Deadlines

Click here to see information about our Services and Fees

Proposition 13- Real Property

Proposition 13, adopted by California voters in 1978, changed the definition of Taxable Value for all real property in the State.

Proposition 13 rolled back most real property, or real estate, assessments to 1975 market value levels, limited the property tax rate to 1 percent plus the rate necessary to fund local voter-approved bonded indebtedness, and limited future property tax increases.

Taxable Value of real property is now defined as the :

  • Factored Base Year Value (FBYV), or
  • Market value on lien date (January 1st), whichever is lower

Certain types of special-use properties including historical properties, government-owned land, cemeteries and agricultural preserves are valued under different guidelines.

Proposition 13 establishes a base year value for real estate and limits increases in the taxable value. Base year value is determined as follows:

  • The base year value of property acquired before March 1, 1975 is the 1975 assessed value
  • The base year value of property acquired on or after March 1, 1975 is usually the market value when the property was transferred

Proposition 13 generally limits annual increases in the base year value of real property to no more than 2 percent, EXCEPT when property changes ownership or undergoes new construction.

How Factored Base Year Value (FBYV) Is Calculated

The FBYV of properties that have not changed ownership since the prior lien date, (prior January 1), is calculated using the following formula:

New Factored Base Year Value = Factored base year value from prior year + Value of new construction + Consumer Price Index (CPI) increase (no more than 2% per year)

Increases In Taxable Value – The 2% CPI Issue

Your taxable value can increase more than 2% in one year if your property experienced any of the following:

  • A Change In Ownership
  • New Construction
  • Temporary reduction(s) in taxable value in prior tax year(s)

Disparities in Assessed Value

Under Proposition 13, similar properties can have substantially different assessed values based solely on the dates the properties were purchased. Disparities result wherever significant appreciation in property values has occurred over time. Longtime property owners, whose assessed values generally may not be increased more than 2 percent per year, tend to have markedly lower tax liability than recent purchasers, whose assessed values tend to approximate market levels.

Property Not Covered by Proposition 13

Proposition 13 does not affect the assessment of all property. Properties not affected by Proposition 13 fall into two general categories:

• Personal property
• Utilities, railroads, and other properties assessed by the BOE

History

On June 6, 1978, California voters overwhelmingly approved Proposition 13, a property tax limitation initiative.   This amendment to California’s Constitution was the taxpayers’ collective response to dramatic increases in property taxes and a growing state revenue surplus of nearly $5 billion.

After Proposition 13, county property tax revenues dropped from $10.3 billion in 1977-78 to $5.04 billion in 1978-79. As a result, many local governments were in fiscal crisis. Keeping local governments in operation the first two years following Proposition 13 required legislative “bailouts†to offset property tax revenue losses. A first-year stopgap measure costing $4.17 billion in state surplus funds was necessary to directly aid local governments. A second-year bailout, a long-term fiscal relief plan, cost the state $4.85 billion.

Prior to 1978, real property was appraised cyclically, with no more than a five-year interval between reassessments. Since property values were systematically reviewed and updated, assessed values were usually kept at or near current market value levels. In contrast, under Proposition 13, properties are reassessed to current market value only upon a change in ownership or completion of new construction (called the base year value). Essentially, Proposition 13 converted the market value-based property tax system to an acquisition value-based system.

Due to Court Challenges to Proposition 13, immediately after Proposition 13 passed, its constitutionality was challenged. The California Supreme Court upheld the constitutionality of Proposition 13 in Amador Valley Joint Union High School District v. State Board of Equalization on September 22, 1978. The decision rendered in this case remained the highest judicial ruling on Proposition 13 until 1992, when the United States Supreme Court ruled, in Nordlinger v. Hahn, that Proposition 13 did not violate the equal protection clause of the United States Constitution. This ruling effectively ended speculation about whether the judicial system would ever overturn or modify Proposition 13.


 

Proposition 13 FAQs

 


Contact Us For a Free Evaluation

Call Us

1 (800) 608-8068 

Tax Appeal Consultants Website Terms and Condition of Use