A California property tax assessment starts with the price you paid for the property and, under Proposition 13, rises by no more than 2% a year for as long as you own it. The base tax rate is capped at 1% of that assessed value, though voter-approved bonds and special assessments usually push the effective rate a bit higher. A full reset to current market value happens only when the property changes hands or you complete new construction. That is why two nearly identical homes on the same block can carry very different tax bills.
How Your Base Year Value Gets Set
Every calculation begins with the Base Year Value. For a standard purchase, that is simply the sale price recorded on the deed. For new construction, it is the fair market value of the completed work on the date it is finished.
Once set, the Base Year Value stays with the property for as long as you own it. The county assessor uses it as the foundation for your bill every year, adjusting it only by the small annual inflation factor described next. The number does not reset unless there is a change in ownership or new construction.
The 2% Annual Cap
Each year, the assessor adjusts your Base Year Value upward by the change in the California Consumer Price Index, but never by more than 2%. Whichever is lower, the actual CCPI figure or the 2% ceiling, is what the assessor applies.1California State Board of Equalization. 2024-25 California Consumer Price Index Letter to County Assessors The adjusted number is called the Factored Base Year Value.
The 2% ceiling kicks in often. The CCPI change for the 2025–26 assessment year was 2.514%, so assessors used the 2% cap.2California State Board of Equalization. 2025-26 California Consumer Price Index Letter to County Assessors Over ten or twenty years, a growing gap opens between your assessed value and what the property would actually sell for. That gap is the tax benefit Proposition 13 was designed to create.
When the Market Drops
The 2% cap protects you when prices rise. A separate rule protects you when prices fall. Proposition 8, passed in November 1978, requires the assessor to temporarily lower your assessed value if your property’s current market value drops below the Factored Base Year Value.3California Board of Equalization. Decline in Value – Proposition 8 You pay taxes on whichever figure is lower.
The assessor checks conditions every year as of the January 1 lien date. When values recover, your assessed value can climb by more than 2% in a single year, but it can never exceed the Factored Base Year Value you would have had without the downturn. Once you are back on that original track, the normal 2% cap resumes.3California Board of Equalization. Decline in Value – Proposition 8 Reductions are supposed to happen automatically, but if you bought near a peak and prices have since slid, it is worth asking the assessor’s office to review your value.
The 1% Rate and What Stacks On Top
Proposition 13 caps the base rate at 1% of your assessed value. A Factored Base Year Value of $500,000 produces a base levy of $5,000.4Placer County. Proposition 13
The surprise for many owners is what stacks on top. Voter-approved bonds and special assessments, including school bonds, water district charges, and local infrastructure measures, each add a fraction of a percent. The combined effective rate varies by tax rate area, but 1.1% to 1.3% is common, and some areas run higher. These are set by local ballot measures rather than the assessor, and they appear as separate line items on your bill.4Placer County. Proposition 13
What Triggers a Full Reassessment
A change in ownership is the main event that resets your Base Year Value to current market value. The typical trigger is a sale to an unrelated buyer, and the new Base Year Value becomes the purchase price. From there, the 2% annual cap starts fresh. New construction is the other trigger and works somewhat differently, covered further down.
Transfers That Do Not Reset the Value
Not every transfer counts as a change in ownership. Two common categories are excluded:
- Transfers between spouses or registered domestic partners, including transfers on divorce or death, never trigger reassessment.5California Legislative Information. California Code Revenue and Taxation Code 63
- Moving a property into a revocable living trust, partnership, or LLC does not trigger reassessment as long as proportional ownership interests stay identical. Putting your home into your own revocable trust is the everyday example.
Parent-Child and Grandparent-Grandchild Transfers
The rules here changed sharply. Proposition 19 took effect on February 16, 2021 and repealed the older parent-child exclusions that had existed since 1986. Under the prior rules, parents could transfer a primary residence of any value and up to $1 million in other property to their children without reassessment. That is no longer the law.6California Board of Equalization. Exclusions from Reappraisal Frequently Asked Questions
Under Proposition 19, the exclusion for a parent-to-child transfer (or grandparent-to-grandchild transfer, if the middle-generation parents are deceased) applies only if the property was the transferor’s principal residence, and the child receiving it makes it their own principal residence within one year and files for the homeowner’s or disabled veterans’ exemption.7California State Board of Equalization. Proposition 19 Vacation homes, rentals, and commercial property no longer qualify at all.
Even for qualifying family homes, there is a value cap. The assessed value is fully preserved only if the property’s current market value does not exceed the existing Factored Base Year Value plus an inflation-adjusted amount (currently $1,044,586 for transfers between February 16, 2025 and February 15, 2027). If market value exceeds that sum, the excess gets added to the new assessed value.7California State Board of Equalization. Proposition 19 Say a home has a Factored Base Year Value of $300,000 and a market value of $1,500,000. The new assessed value would be roughly $500,000 rather than $300,000, because the amount above the cap gets tacked on.
Family farms qualify under a parallel provision. The claim form must be filed within three years of the transfer or before the property is sold to a third party, whichever comes first.7California State Board of Equalization. Proposition 19 Missing that deadline is one of the more expensive mistakes in California estate planning.
Ownership Changes Inside a Legal Entity
When a corporation, partnership, LLC, or other legal entity owns California real estate, a transfer of more than 50% of the ownership interests in that entity can trigger a full reassessment of the underlying property.8California Board of Equalization. Legal Entity Ownership Program – Definition of Change in Ownership The 50% threshold can be reached in one transaction or through cumulative transfers.
Any change in control or ownership that crosses that line must be reported to the Board of Equalization on Form BOE-100-B within 90 days. Filing late brings a penalty of 10% of the taxes attributable to the new assessed value, added to the tax roll and collected like any other delinquent property tax.9California State Board of Equalization. BOE-100-B Statement of Change in Control and Ownership of Legal Entities
Carrying Your Assessed Value to a New Home
Proposition 19 also expanded the ability of certain homeowners to move their low assessed value to a replacement home. The old rules limited this to the same county or a short list of participating counties. Now the transfer works statewide.
You qualify if you are at least 55 years old, severely disabled, or the victim of a wildfire or natural disaster. You must buy or build a new primary residence within two years of selling the original.10California State Board of Equalization. Proposition 19 Base Year Value Transfer Guidance Questions and Answers Homeowners who qualify by age or disability can use the transfer up to three times. Disaster victims have no limit.
If the replacement home costs the same or less than the original, you carry over your old assessed value directly. If it costs more, the difference between the two sale prices gets added to your transferred Base Year Value.10California State Board of Equalization. Proposition 19 Base Year Value Transfer Guidance Questions and Answers Either way, you skip a full reset to market value. The claim form must be filed within three years of buying the replacement home, though a late filing still qualifies for prospective relief starting from the year you submit it.
How New Construction Gets Assessed
New construction is the second trigger, and it works differently from a sale. Only the value of the new work is reassessed at current market value. The original structure keeps its existing Factored Base Year Value, creating a blended assessment.
New construction covers any addition or alteration that substantially adds value or extends useful life. Adding a bedroom, building a detached garage, or installing a pool all count. Routine maintenance and cosmetic repairs do not.11California State Board of Equalization. Assessors Handbook Section 410 – Assessment of Newly Constructed Property The assessor values only the newly constructed portion as of its completion date, then adds that figure to the existing factored value. From there, both parts are subject to the 2% annual cap.
One nuance matters. The assessor adds the value of the improvement, not necessarily what you spent on it. If you paid $150,000 for a remodel but the market value added is $120,000, the assessment goes up by $120,000.11California State Board of Equalization. Assessors Handbook Section 410 – Assessment of Newly Constructed Property
Multi-Year Projects
Larger projects do not wait until everything is finished. The assessor can pick up any portion of new construction that is complete and usable as of the January 1 lien date each year. Each phase gets its own Base Year Value on completion. Once the whole project is done, the full new construction value is finalized.
Solar Panels Are Excluded
Installing solar is one of the few major improvements that will not raise your assessment. California law excludes qualifying active solar energy systems from being assessed as new construction, so the installation adds nothing to your assessed total.12California Board of Equalization. Active Solar Energy System Exclusion
Qualifying systems include those used for water heating, space heating and cooling, and electricity production. Solar pool heaters, hot tub heaters, passive solar designs, and wind systems do not qualify. The exclusion is authorized through the 2025–26 fiscal year, with the statute scheduled to sunset on January 1, 2027.12California Board of Equalization. Active Solar Energy System Exclusion
Supplemental Bills After a Reassessment
When you buy a property or finish new construction, your annual tax bill does not adjust on its own mid-year. The assessor issues a separate supplemental assessment covering the difference between the old and new values, prorated for the months left in the fiscal year, which runs July 1 through June 30.13California State Board of Equalization. Supplemental Assessment
Proration starts on the first day of the month after the reassessment event. Close on a purchase in October, and your supplemental bill covers November through June, eight months. If the event happens between January and May, you will receive two supplemental bills: one for the rest of the current fiscal year and a second covering the full next fiscal year that begins July 1.13California State Board of Equalization. Supplemental Assessment New owners who are not expecting that second bill sometimes mistake it for an error. It is not.
If your property’s assessed value went down instead of up (for example, you bought a home for less than its previous assessed value), the supplemental assessment runs in reverse and you receive a refund.
Appealing Your Assessed Value
If you think the assessor set your value too high, you can file a formal appeal with your county’s Assessment Appeals Board. Most counties charge no fee.
The regular filing window opens July 2 each year. It closes September 15 in counties where the assessor mails assessment notices to all property owners on the secured roll by August 1. In all other counties, the deadline extends to November 30.14California State Board of Equalization. County Assessment Appeals Filing Period for 2025 For a supplemental assessment from a recent purchase or construction, the deadline is 60 days from the date the supplemental notice was mailed.15California State Board of Equalization. Assessment Appeals Frequently Asked Questions
You carry the burden of proving the value is too high. The strongest evidence is comparable sales data: recent sales of similar properties near the valuation date. Look for properties sold within the past six to twelve months that match yours in size, age, condition, and location. Three to five solid comparables tend to persuade more than a single sale. The board weighs evidence from both sides, so bring documentation rather than a sense that the bill feels wrong.