California property tax law caps the base tax rate at 1% of a property’s assessed value and limits annual assessment increases to 2%, or the rate of inflation if lower. Those two rules, written into the state constitution by Proposition 13 in 1978, anchor the whole system. Everything else — exemptions, transfer rules, special assessments, and the appeals process — layers on top and can meaningfully change what you actually pay.
The 1% Cap and the 2% Annual Increase Limit
Article XIII A of the California Constitution sets the maximum ad valorem property tax rate at 1% of a property’s full cash value.1Justia. California Constitution Article XIII A – Tax Limitation “Full cash value” is the appraised value at the moment you buy the property, complete new construction, or otherwise trigger a change in ownership. That figure becomes your base year value, and the county assessor uses it as the starting point going forward instead of re-appraising to current market value each year.
Section 2 of the same article allows the assessed value to rise annually by the rate of inflation or 2%, whichever is lower.2Justia. California Constitution Article XIII A – Tax Limitation – Section 2 Revenue and Taxation Code Section 51 reinforces the ceiling: the annual percentage increase can never exceed 2%, even when actual inflation runs higher.3California Legislative Information. California Revenue and Taxation Code RTC 51 The system rewards long-term ownership and produces wide disparities between neighbors, because a home bought decades ago carries a much lower assessed value than an identical one sold last year.
What Triggers a Reassessment
Your assessed value stays locked in unless a specific event forces a reset to current market value. The two big triggers are a change in ownership and new construction.
Revenue and Taxation Code Section 60 defines change in ownership broadly as a transfer of a present interest in real property, including its beneficial use.4California Legislative Information. California Code Revenue and Taxation Code 60 – Change in Ownership and Purchase A standard home sale is the obvious example, but the definition also reaches transfers between corporations and their shareholders, and the creation of leases lasting 35 years or more, including renewal options.5California Legislative Information. California Revenue and Taxation Code 60 – Change in Ownership
New construction is the other major trigger, but only the new portion gets a fresh assessment. Add a $150,000 addition to a home assessed at $400,000 and the new total is $550,000. The original structure keeps its existing base year value.
Supplemental Bills After a Reassessment
New owners are often blindsided by supplemental tax bills. These are one-time bills covering the gap between the old assessed value and the new base year value, prorated for the remaining months in the fiscal year. Under Revenue and Taxation Code Section 75.11, if the change in ownership or new construction happens between January 1 and May 31, two supplemental assessments may be added to the roll, one for the current year and one for the coming year. Events between June 1 and December 31 generate a single supplemental assessment.6California Legislative Information. California Revenue and Taxation Code RTC 75.11 Buying in March can produce two supplemental bills; a September closing typically produces one. They arrive separately from the regular annual bill.
Exemptions and Transfer Protections
Several rules can lower your bill or protect your existing base year value when property changes hands.
Homeowners’ Exemption
Occupying your home as a primary residence on January 1 qualifies you for a $7,000 reduction in assessed value under Article XIII, Section 3 of the California Constitution.7Justia. California Constitution Article XIII Section 3 – Taxation At the 1% base rate, that’s about $70 a year.8California State Board of Equalization. Homeowners’ Exemption Small money, but you have to file for it with your county assessor. It does not apply automatically.
Disabled Veterans’ Exemption
Veterans with a service-connected disability rated at 100%, or compensated at the 100% rate due to unemployability, can exempt a much larger share of their home’s value. For the 2026 assessment year, the basic exemption is $180,671. Veterans with household income at or below $81,131 qualify for the low-income exemption of $271,009.9California State Board of Equalization. Disabled Veterans’ Exemption Increases for 2026 These figures adjust annually for inflation. You cannot claim both this and the homeowners’ exemption; you pick the more valuable one.
Proposition 19 Base Year Value Transfers
Proposition 19, effective April 2021, lets certain homeowners carry their low assessed value to a replacement home anywhere in California. To qualify, you must be at least 55, severely disabled, or a victim of a wildfire or other natural disaster. The replacement home must be purchased or newly built within two years of selling the original, and it must be your primary residence.10California State Board of Equalization. Proposition 19 Base Year Value Transfer Guidance Questions and Answers
If the replacement costs less than or equal to the original home’s market value at sale, the base year value transfers in full. If it costs more, the difference in market value gets added to the transferred base.11Board of Equalization. Proposition 19 – The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act Seniors and disabled owners can use this benefit up to three times. Wildfire and disaster victims face no cap on the number of transfers.10California State Board of Equalization. Proposition 19 Base Year Value Transfer Guidance Questions and Answers
Parent-to-Child and Grandparent-to-Grandchild Transfers
Proposition 19 also tightened the rules for passing property between generations. Before February 2021, parents could transfer a primary residence plus up to $1 million in other property to their children without triggering reassessment. Now, only the family home qualifies, the child must use it as their own primary residence, and there is a value cap.
The exclusion protects only the first $1,044,586 (for transfers between February 16, 2025, and February 15, 2027) of value above the property’s factored base year value. If current market value exceeds the existing assessed value plus that cap, the excess gets added to the new tax base.12California State Board of Equalization. Proposition 19 Fact Sheet The Board of Equalization adjusts the dollar figure every two years for inflation. A child inheriting a home worth $2 million with a base year value of $200,000 would see the assessed value climb to roughly $755,414 rather than reset to $2 million. If the child does not move in and file for the homeowners’ exemption within a year of the transfer, the property gets fully reassessed with no exclusion at all.
Mello-Roos and Other Special Assessments
Proposition 13’s 1% cap applies only to the base ad valorem tax. Many California homeowners also pay special taxes authorized by the Mello-Roos Community Facilities Act of 1982.13Justia. California Government Code Chapter 2.5 – The Mello-Roos Community Facilities Act of 1982 Local agencies use this law to form Community Facilities Districts that issue bonds for schools, roads, parks, fire stations, and similar infrastructure.
Mello-Roos taxes are not based on property value. The district calculates each parcel’s share using factors like lot size, square footage, or land use type, and the charges appear as separate line items on your annual tax bill. Voters must approve the tax before it can be levied, and the lien stays attached to the property until the bonds are paid off.14California Legislative Information. California Government Code 53321 – Proceedings to Create a Community Facilities District Newer planned developments tend to carry heavier Mello-Roos obligations because the surrounding infrastructure was bond-financed. Any buyer in such a community should check the Mello-Roos load before closing. It can add thousands per year and sits entirely outside the 1% Proposition 13 limit.
Payment Deadlines and Late Penalties
The property tax fiscal year runs July 1 through June 30, and the annual bill is split into two installments. The first is due November 1 and becomes delinquent after 5 p.m. (or close of business, whichever is later) on December 10.15California Legislative Information. California Revenue and Taxation Code 2617 The second is due February 1 and becomes delinquent after April 10. If a deadline falls on a weekend or holiday, it moves to the next business day.
A late first installment triggers a flat 10% penalty.15California Legislative Information. California Revenue and Taxation Code 2617 A late second installment brings a 10% penalty plus an additional cost. Mailed payments are timely if the envelope bears a U.S. Postal Service postmark on or before the delinquency date. Missing or illegible postmarks with late arrival mean penalties apply regardless of when you dropped it in the mailbox.
What Happens if Taxes Stay Unpaid
When both installments remain unpaid at the end of the fiscal year, the property is declared tax-defaulted at 12:01 a.m. on July 1.16State Controller’s Office. Public Auctions and Bidder Information After that, the unpaid balance accrues interest at 1.5% per month, plus a $15 redemption fee. Over a full year, that works out to an 18% effective interest rate.
You have a redemption period to clear the balance before the county can sell the property: five years for residential, three years for nonresidential commercial.17State Controller’s Office – California. County Tax Collectors’ Reference Manual – Chapter 6000 Missing a year won’t cost you your home overnight, but the hole deepens fast. Contacting the tax collector to set up an installment plan is far cheaper than carrying an 18% annual interest charge.
Postponement for Seniors and Disabled Homeowners
The State Controller’s Office runs a Property Tax Postponement program that lets qualifying homeowners defer their current-year property taxes. The state pays the bill and places a lien on the home, repaid when the property is sold or the homeowner passes away. To qualify, you must be a senior, blind, or have a disability; annual household income cannot exceed $55,181; and you must have at least 40% equity in the home.18State Controller’s Office – California. Property Tax Postponement The filing deadline for the 2025–26 fiscal year is February 10, 2026. This program is separate from Proposition 19 transfers and can be used alongside them.
Challenging an Assessment You Think Is Too High
Two paths let you push back on an assessed value: a Proposition 8 decline-in-value review and a formal assessment appeal.
Proposition 8 Decline-in-Value Review
When your property’s current market value drops below its assessed value as of the January 1 lien date, you may qualify for a temporary reduction under Proposition 8.19California Department of Tax and Fee Administration. Decline in Value – Proposition 8 Causes can include a soft real estate market, neighborhood changes, or physical damage to the property. Some county assessors proactively review values during downturns, but that’s not guaranteed. Filing a decline-in-value application with your county assessor is how you make sure. The reduction is temporary: if market values recover, the assessor can raise the assessed value back up to the original factored base year value.
Formal Assessment Appeals
For broader valuation disputes, file an Application for Changed Assessment with the Clerk of the Assessment Appeals Board, usually housed within the Board of Supervisors. The annual filing window opens July 2 and closes on either September 15 or November 30, depending on whether your county assessor mails assessment notices to all secured-roll taxpayers by August 1.20California State Board of Equalization. County Assessment Appeals Filing Period Miss the deadline and you wait a full year.
The application requires your Assessor’s Parcel Number (printed on your tax bill), the current assessed value, and your opinion of the property’s fair market value. Strong appeals lean on comparable sales data: recent sales of similar properties in your neighborhood that closed near the January 1 lien date. Three to five solid comparables showing lower per-square-foot values tell a stronger story than a single data point. Photographs documenting deferred maintenance, structural problems, or adverse neighborhood conditions help too. The burden of proof sits with you, so bring concrete evidence.