California Base Year Value Under Proposition 13: Resets and Transfers

Your California base year value is the fair market value assigned to your property on the date you bought it or the date a qualifying ownership change was recorded, and it anchors every property tax bill you receive from that point forward. Under Proposition 13, passed by voters in 1978, that value can rise by no more than 2% a year, no matter what nearby homes are selling for. Combined with the 1% cap on the base tax rate, the rule is what keeps long-term owners insulated from sudden tax jumps.

How the Number Gets Set

Revenue and Taxation Code Section 110.1 defines the base year value as the property’s “full cash value” on the date of purchase or change in ownership.¹ In a standard arm’s-length sale, the purchase price on the deed is that value. If the assessor believes the recorded price doesn’t reflect a genuine market transaction — a sale between relatives at a discount, for example — the county uses comparable recent sales nearby to set the value instead.

Properties that haven’t changed hands since Proposition 13 took effect still carry a base year value drawn from the 1975–76 tax roll, adjusted upward each year since.² That’s why some longtime homeowners pay strikingly little relative to what their homes would sell for today.

The 1% Rate and the 2% Annual Cap

Proposition 13 caps the base property tax rate at 1% of assessed value, with voter-approved local bond rates layered on top.³ Your annual bill starts at roughly 1% of your base year value and grows slowly as that value is adjusted for inflation.

Article XIIIA, Section 2 of the state constitution limits the annual adjustment to 2% or the actual rate of inflation, whichever is lower.⁴ The inflation figure comes from the California Consumer Price Index for all items, measured October to October by the Department of Industrial Relations.⁵ For the 2025–26 assessment year, the adjustment hit the full 2% ceiling.⁶

The gap widens over time. A home purchased for $500,000 in 2010 might carry a market value above $1 million today, but its factored base year value would sit closer to $650,000 after fifteen years of capped increases. Tax gets paid on the $650,000, not on what a buyer would offer.

What Resets Your Base Year Value

Your factored base year value stays put until something forces a reassessment at current market levels. Three events do most of the work: sales, new construction, and changes in control of legal entities that own real estate.

Sales and Ownership Changes

Any transfer of a present interest in property where the value transferred is substantially equal to the full ownership interest counts as a change in ownership.² An arm’s-length sale to a third party resets the base year value to the purchase price. The seller’s decades of capped 2% increases vanish, and the new owner starts fresh.

New Construction

Adding square footage, building an accessory dwelling unit, or converting a garage into living space all count as new construction.⁷ The assessor values the new work and adds that amount to your existing base year value. The original structure keeps its historical assessment. Only the additions get a fresh base year value.

Routine maintenance and cosmetic repairs don’t trigger reassessment. The line falls at work that converts the property to a substantially new condition or changes its use. Replacing a worn roof with equivalent materials is maintenance; adding a second story is new construction. Rebuilding after a disaster to substantially the same condition doesn’t count either, and the base year value survives intact.⁷

Legal Entity Transfers

Property held inside an LLC, corporation, or partnership can be reassessed without anyone selling the building. When someone acquires more than 50% of the ownership interests in the entity, all real property that entity owns is reassessed.⁸

The same rule applies when the original co-owners of the entity sell off their interests gradually. Once more than 50% of the original interests have been transferred, even across many years and many transactions, the property is reassessed. Changes in control must be reported to the Board of Equalization on Form BOE-100-B within 90 days.⁸ This is where commercial property owners often get caught: the reassessment surfaces years after the first sale of interests.

Transfers That Skip Reassessment

Several ownership changes are excluded from reassessment. Transfers between spouses top the list. Any transfer between married spouses — into a trust for a spouse’s benefit, at death, or in a divorce — leaves the base year value alone.⁹ Registered domestic partners are treated the same way.

Transfers into and out of revocable living trusts also avoid reassessment as long as the person who created the trust remains a beneficiary. Standard estate planning doesn’t inadvertently reset the tax base. Once a transfer shifts actual beneficial ownership to someone new, it’s treated like any other change in ownership.

Parent-Child and Grandparent-Grandchild Transfers

Proposition 19 sharply narrowed the parent-child exclusion. Only a family home that was the parent’s primary residence and will become the child’s primary residence still qualifies, along with a family farm. Rental properties, vacation homes, and investment real estate no longer qualify at all.¹⁰

Even for qualifying property, a value limit applies. The exclusion covers the factored base year value plus $1,044,586 for transfers between February 16, 2025 and February 15, 2027, with the figure adjusted every two years.¹¹ If the fair market value exceeds the factored base year value plus that amount, the excess is added to the transferred assessment.

The child must file for the homeowners’ exemption or the disabled veterans’ exemption within one year of the transfer. The exclusion claim itself — Form BOE-19-P for parent-child or BOE-19-G for grandparent-grandchild — goes to the county assessor within three years of the transfer date, or before the property is sold to someone else, whichever comes first.¹⁰ Grandparent-to-grandchild transfers only qualify when the grandchild’s parents are deceased.¹¹

Moving Your Base Year Value to a New Home

Proposition 19, effective April 2021, lets qualifying homeowners take their existing base year value to a replacement home anywhere in California. You must fit one of three categories: at least 55 years old, severely and permanently disabled, or a victim of a wildfire or natural disaster. Both the home you sell and the home you buy must be your primary residence, and the replacement must be purchased or built within two years of the sale.¹⁰

Homeowners qualifying by age or disability can use the benefit up to three times in their lifetime.¹² Disaster victims face no such limit.

When the Replacement Costs More

You can still transfer your base year value to a more expensive home, but the excess gets added to your assessment. If you buy within the first year after selling, replacement values up to 105% of the original home’s market value carry no adjustment. In the second year, the cushion rises to 110%.¹³

The math: if your original home had a factored base year value of $300,000 and a market value of $600,000, and you buy a replacement for $700,000, the $100,000 difference is added to the transferred assessment. Your new taxable value is $400,000, well below the $700,000 you paid.¹³

Which Form to File

The form depends on your qualifying category:¹⁰

Age 55 or older: BOE-19-B
Severely disabled: BOE-19-D, plus the BOE-19-DC disability certificate
Wildfire or disaster victim: BOE-19-V

File with the county assessor where the replacement property is located. You’ll need parcel numbers for both properties, the sale and purchase dates, and documentation of your eligibility.

When Market Declines Lower Your Assessment

The base year value isn’t a one-way ratchet. Under Proposition 8, a 1978 companion measure, if your property’s current market value drops below its factored base year value on the January 1 lien date, the assessor must reduce the assessment to the lower market value.¹⁴

The reduction is temporary. As the market recovers, the assessor raises your assessed value, and those recovery increases are not subject to the 2% annual cap. Your assessed value can jump by more than 2% in a single year as it climbs back. The ceiling still holds: your assessed value can never rise above the factored base year value unless a change in ownership or new construction occurs.¹⁴

The assessor reviews decline-in-value properties every year without any action from you. If you think your property qualifies and no reduction has been applied, you can file an assessment appeal.

Supplemental Tax Bills After a Purchase

New owners often get blindsided by a supplemental tax bill that shows up a few months after closing. It’s separate from the regular annual bill and covers the difference between the previous owner’s lower assessed value and the new base year value for the rest of the fiscal year.¹⁵

The county assessor subtracts the old assessed value from the new, multiplies by the tax rate, and prorates based on how many months remain in the fiscal year, which runs July 1 through June 30. A closing in October carries a proration factor of 0.75, covering nine of the twelve remaining months. Close in March, and the factor drops to 0.33.¹⁵

Timing also determines how many bills you get. Buy between June and December, and you’ll receive one. Buy between January and May, and you’ll get two: one for the remainder of the current fiscal year and another for the full following fiscal year.¹⁵ These bills arrive separately from the regular tax bill and are easy to overlook, but the same penalties and interest apply to late payment.

Contesting Your Base Year Value

If you think your new base year value is too high, you can appeal. File an Assessment Appeal Application (Form BOE-305-AH) with the clerk of the board in the county where your property sits.¹⁶

Deadlines vary by county. A handful — including Alameda, San Francisco, Santa Clara, and Ventura — cut off applications on September 15. Most other counties accept filings through November 30, or December 1 when November 30 falls on a weekend.¹⁷ Miss the deadline, and you lose your appeal right for that year.

Once your application is accepted, you may be scheduled for a hearing before the Assessment Appeals Board, or you can try to reach a negotiated agreement with the assessor’s office beforehand. Bring evidence of a lower value: recent comparable sales, an independent appraisal, or documentation of defects that affect what a buyer would pay. The board decides valuation. It’s not the place to argue that Proposition 13 should work differently.

Reporting Deadlines and Penalties

California law requires you to notify the county assessor when a change in ownership occurs by filing a change-in-ownership statement. If you fail to file within 90 days after the assessor mails a written request, the penalty is $100 or 10% of the taxes on the new base year value, whichever is greater. The penalty caps at $5,000 for properties eligible for the homeowners’ exemption and at $20,000 for all others.¹⁸

Legal entities carry a separate obligation. Any change in control of an entity that owns California real property must be reported to the Board of Equalization on Form BOE-100-B within 90 days. The penalty for failing to report is 10% of the taxes on the new base year value.¹⁸ These penalties get added directly to your tax roll and are hard to get waived, so filing on time — even when you think the transfer might be excluded from reassessment — is worth the effort.

1
California Legislative Information. California Revenue and Taxation Code 110.1
2
California State Board of Equalization. Change in Ownership
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California State Board of Equalization. California Property Tax – An Overview
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FindLaw. California Constitution Article XIIIA, Section 2
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California Legislative Information. California Revenue and Taxation Code 51
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California State Board of Equalization. 2025-26 California Consumer Price Index
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California Legislative Information. California Revenue and Taxation Code 70
8
California State Board of Equalization. Legal Entity Ownership Program (LEOP) – Definition of Change in Ownership
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California Legislative Information. California Revenue and Taxation Code 63
10
California State Board of Equalization. Proposition 19 – Board of Equalization
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California State Board of Equalization. BOE Adjusts the Proposition 19 $1 Million Intergenerational Transfer Exclusion Amount
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California State Board of Equalization. Prop 19 Base Year Value Transfer Guidance Questions and Answers
13
California State Board of Equalization. Proposition 19 Fact Sheet
14
California State Board of Equalization. Decline in Value – Proposition 8
15
California State Board of Equalization. Supplemental Assessment
16
California State Board of Equalization. Assessment Appeals FAQs
17
California State Board of Equalization. County Assessment Appeals Filing Period
18
California Legislative Information. California Revenue and Taxation Code 482