Proposition 13 is the single most important thing to understand about California property taxes. It is why your long-time neighbor may pay far less than you, and why your taxes stay predictable over time. Here is how it works for new buyers.
The core of Prop 13
Proposition 13, passed in 1978, does two main things: it sets the base property tax at about 1% of assessed value, and it limits how fast your assessed value can rise — generally no more than about 2% per year while you own the home. Together these create predictable, slowly rising property taxes for owners.
How your assessed value is set
When you buy, your assessed value is generally established at your purchase price. From there, it can increase only about 2% per year regardless of how much the market rises. So even in a hot market, your tax base grows slowly while you own — a major benefit of Prop 13.
Reassessment at a change of ownership
The slow growth resets when the property changes hands. A sale generally triggers reassessment to the new market value (usually the purchase price). That is why a brand-new buyer's tax base is often far higher than a long-time owner's next door — even in identical homes.
Why neighbors pay different taxes
Because each owner's assessed value is anchored to their own purchase price and capped at about 2% growth, two identical homes can carry very different tax bills depending on when each owner bought. This is a direct, intentional result of Prop 13.
What Prop 13 does not cap
Prop 13 caps the base rate and assessment growth, but voter-approved bonds, special assessments, and Mello-Roos are layered on top. So your total bill can still vary by location even though the base mechanics are the same. Always look at the full bill, not just the 1% base.
What new buyers should remember
- Expect your tax base to reset to your purchase price.
- Plan for about 1% base plus add-ons and any Mello-Roos.
- Know your assessed value will rise slowly (~2%/yr) after that.
- Confirm your specific figures with the county.
Frequently Asked Questions
What is Proposition 13?
Proposition 13 is a California law that caps the base property tax at about 1% of assessed value and limits annual increases in assessed value to roughly 2% per year while you own the home. Your assessed value is generally set at your purchase price, then grows slowly. Confirm your specific figures with the county.
How does Prop 13 affect my property tax as a new buyer?
When you buy, your assessed value is generally set at your purchase price, and the home is reassessed to market value at the sale. After that, your assessed value rises only about 2% per year while you own. So your tax base resets to what you paid, then grows slowly. Confirm specifics with the county.
Why does my neighbor pay less property tax?
Under Prop 13, each owner's assessed value is anchored to their own purchase price and capped at about 2% annual growth. A neighbor who bought long ago may have a much lower assessed value than a recent buyer, even in an identical home. This difference is an intentional result of Proposition 13.
What is the 2% cap under Prop 13?
It limits how much your assessed value can increase each year while you own the home — generally no more than about 2% — regardless of how much the market rises. This keeps your property taxes predictable over time. When the home sells, it is reassessed to market value, usually the new purchase price.
Does Prop 13 cap my entire tax bill?
No. Prop 13 caps the base rate at about 1% and limits assessment growth, but voter-approved bonds, special assessments, and Mello-Roos are added on top. So your total bill can vary by location even with the same base mechanics. Always review the full bill, not just the 1% base.
What triggers reassessment under Prop 13?
A change of ownership, such as a sale, generally triggers reassessment to the property's current market value, usually the purchase price. Certain transfers may qualify for exclusions under related rules like Proposition 19. Because the rules have specifics, confirm how a particular transfer is treated with the county or a tax professional.
