Complete Guide to California Property Taxes: Prop 13, Assessed Value, and What Homebuyers Need to Know

California property taxes are unlike those in any other state. At first glance, the system looks remarkably low-tax: the base rate is capped at 1% of assessed value statewide, far below the 2%+ effective rates common in New Jersey, Illinois, or Texas. But what makes California's system unusual — and deeply consequential for homebuyers — is not the rate. It is how assessed value is determined and how it changes over time.

The landmark Proposition 13, passed by California voters in 1978, fundamentally restructured how property is taxed in the state. Its effects shape California's housing market, local government budgets, and the financial experience of every homeowner and homebuyer in the state today.

How Proposition 13 Works

Proposition 13 established two foundational rules that govern California property taxation to this day. First, the base property tax rate is capped at 1% of assessed value, plus any voter-approved special taxes for bonds and assessments (more on those shortly). Second — and more impactful — the assessed value of a property is set at the purchase price (or "base year value") when the property changes ownership, and can only increase by a maximum of 2% per year, or by the California Consumer Price Index (CPI) if it is lower.

In practice, this means a homeowner who bought a property in 1990 for $250,000 has an assessed value in 2025 of at most $250,000 × (1.02)^35 — approximately $499,000. If the home is now worth $1.5 million on the open market, the longtime owner is being taxed on about one-third of the property's actual value. Their annual property tax bill might be around $5,000–$6,000 on a home worth $1.5 million.

When that same property sells, the assessed value immediately resets to the purchase price — the new buyer's $1.5 million. Their annual base tax bill becomes approximately $15,000, before any special assessments. A new buyer pays three times what the previous owner paid, instantly, on the same house.

What Prop 13 Means for Homebuyers

For anyone buying a home in California, the most important thing to understand is that your tax bill will be based on your purchase price, not what the previous owner was paying. Do not budget based on what you see in public records for the current owner's taxes — especially if the current owner has lived there for many years.

At a 1% base rate plus typical local bond assessments (usually 0.1% to 0.4% additional), California buyers typically pay an effective rate of 1.1% to 1.4% of purchase price. On a $900,000 home, that translates to roughly $10,000 to $12,600 per year — a very large dollar amount even though the rate is below the national median.

Supplemental Property Tax Bills

When you purchase a California home, you will receive one or more supplemental property tax bills in addition to your regular annual tax bill. Supplemental bills cover the period between your purchase date and the start of the next fiscal year (July 1), during which your assessed value has already jumped to the purchase price but the regular tax roll has not yet caught up.

The supplemental bill can be large. If you close in October and your assessed value increased by $600,000 at purchase, the supplemental bill will charge you for approximately nine months of additional tax on that $600,000 increase — roughly $5,500 to $7,000 at a combined rate of 1.1 to 1.3%.

Supplemental bills arrive by mail — typically 3 to 12 months after closing — and are separate from the regular tax bill your lender may be collecting in escrow. If your lender is not aware of the supplemental amount (many are not, in the first year), you may receive the bill directly and need to pay it out of pocket. Contact your lender and county tax collector after closing to confirm how supplemental bills will be handled.

Proposition 19: Parent-to-Child Transfers and Portability

California voters passed Proposition 19 in November 2020, making two significant changes to the Prop 13 framework that took effect in early 2021.

First, Prop 19 substantially narrowed the parent-to-child property transfer exemption. Under the prior system (Prop 58), children who inherited a parent's home could continue paying taxes based on the parent's low assessed value, regardless of how they used the property. Under Prop 19, inherited properties only retain the parent's low assessed value if the child uses the property as their primary residence. If the child rents it out, sells it, or uses it as a second home, the assessed value resets to current market value. Additionally, there is now a cap: if the child does move in, only the first $1 million of property value above the parent's assessed value is sheltered.

Second, Prop 19 expanded portability rights for homeowners age 55 or older, homeowners with severe disabilities, and victims of natural disasters. These homeowners can now transfer their existing base-year assessed value to a replacement home anywhere in California (previously limited to a handful of counties), up to three times. If the replacement home costs more than the original, only the excess is assessed at market value. This has made it easier for older homeowners to downsize or move without losing their Prop 13 tax base.

Mello-Roos and Special Assessment Districts

The 1% base rate is only part of what many California homeowners pay. Two additional layers of taxation are common in new and master-planned communities: Mello-Roos special taxes and special assessment districts.

Mello-Roos taxes are levied by Community Facilities Districts (CFDs), which are created under the Mello-Roos Community Facilities Act of 1982. They are used to finance infrastructure — roads, parks, fire stations, schools — in new developments. When a developer creates a CFD to finance infrastructure, the tax obligation attaches to every home in the district and remains on the property for decades, typically 25 to 40 years.

Mello-Roos taxes are not based on property value. They are usually a fixed dollar amount per parcel or per square foot, which means they do not decrease if home values fall. They are not subject to the 2% annual increase cap. In some newer subdivisions in the Inland Empire, Sacramento Valley, or Silicon Valley commuter communities, Mello-Roos obligations of $3,000 to $7,000 per year can add significantly to the base tax bill.

Proposition 8: Requesting a Temporary Reduction

Proposition 8 (1978) allows California property owners to request a temporary reduction in assessed value when the current market value of their property drops below the Prop 13 base year value. This temporary Prop 8 reduction restores the assessed value to current market value (or the Prop 13 base year value, whichever is lower) until the market recovers.

During the 2008–2012 housing downturn, many California counties proactively applied Prop 8 reductions to homeowners whose properties had declined in value. When the market recovered, counties began reassessing these properties upward — sometimes quickly, and sometimes to higher levels than the original Prop 13 base year value, if the market had recovered past the original purchase price.

If you believe your property's current market value is below your assessed value — possible in a downturn or in a market that has cooled locally — you can request a review from your county assessor. File a Decline-in-Value Review Request (Assessment Appeal in some counties) by the applicable deadline, typically November 30 or the date specified on your annual assessment notice.

Reading Your California Tax Bill

California property tax bills are issued by county tax collectors, typically in two installments: the first installment is due November 1 and becomes delinquent after December 10; the second installment is due February 1 and becomes delinquent after April 10. Many homeowners pay through mortgage escrow, so the bills arrive at the lender rather than the homeowner.

Your bill will itemize several components. The 1% general levy is the base Prop 13 tax. Below it, you will typically see line items for voter-approved bond obligations — school district bonds, community college bonds, county bonds — each with their own rate. Any Mello-Roos or CFD taxes appear as a fixed amount. The total of all line items is your actual property tax obligation.

• 1% General Levy: Base Prop 13 tax calculated on your assessed value.
• Voter-Approved Bonds: School district, community college, county, or city bond measures passed by local voters. Each bond adds a small percentage to the rate, typically 0.01% to 0.05% per bond measure, but they accumulate.
• Direct Assessments: Fixed-dollar charges for specific services — vector control, water district operations, street lighting, etc. These are not percentage-based.
• Mello-Roos / CFD: If applicable, a fixed annual amount per parcel or per square foot for community facilities.

Data Source

ZIP-level property tax data on PropertyTaxByZip comes from the U.S. Census Bureau, American Community Survey 2019-2023 5-Year Estimates. California property tax rules described in this article are based on the California Constitution, Revenue and Taxation Code, and California State Board of Equalization guidance as of early 2026. Verify current rules with your county assessor or the California State Board of Equalization (boe.ca.gov).