California property tax starts with the assessed value, not the market value

California property tax is calculated by taking your property's assessed value and multiplying it by the tax rate set by your county. The assessed value is not what your house is worth on the open market. Instead, it is the value assigned by your county assessor, and it follows a specific formula under California's Proposition 13.

When you buy a property, the assessor sets the assessed value at the purchase price. From that point forward, the assessed value can increase by no more than 2 percent per year, even if your home's market value rises much faster. The only time the assessed value resets to current market value is when the property changes ownership or when new construction is added.

Once the assessed value is set, your county multiplies it by the tax rate. In California, the base tax rate is 1 percent of assessed value. On top of that, your county and local districts (schools, fire, water, flood control) add their own rates, which vary by location. The total rate you pay depends entirely on where your property sits.

Key Takeaways

  • Your assessed value is locked at your purchase price and can rise only 2 percent per year under Proposition 13, regardless of how much your home's market value increases.
  • The base tax rate in California is 1 percent of assessed value, with additional rates added by county and local districts that differ by location.
  • Your property is reassessed at current market value only when it is sold or when you add new construction, which triggers a new Proposition 13 cycle.
  • The county assessor's office determines your assessed value and sends you a notice of assessment; you can appeal if you believe the value is wrong.

How the assessed value is determined and when it changes

The county assessor assigns an assessed value to every property in the county. For most residential properties, this value is straightforward the price paid at the most recent sale. If you bought your house for $500,000, that becomes your assessed value on the tax roll.

From that starting point, Proposition 13 limits increases to 2 percent per year. So a property with an assessed value of $500,000 in year one would have an assessed value of $510,000 in year two (2 percent of $500,000 is $10,000). This continues year after year, even if homes in your neighborhood are selling for $700,000 or $800,000.

The assessed value resets to current market value in two situations. The first is when the property is sold. A new owner's assessed value starts fresh at the sale price. The second is when you add new construction—a room addition, a second story, a new garage. The assessor values only the new construction at current market rates and adds that to your existing assessed value. The original portion of your home stays on its old Proposition 13 schedule.

Transfers between family members, certain transfers to trusts, and transfers of property to a spouse do not trigger a reassessment under Proposition 13. These are called Prop 13 exclusions, and they allow the assessed value to stay low even when ownership changes. The rules for these exclusions are strict and require filing with the assessor.

The tax rate: base rate plus local additions

Once your assessed value is set, the county multiplies it by a tax rate. The base rate in California is 1 percent of assessed value. This is set by state law and applies everywhere in the state.

On top of the base rate, your county and local districts add their own rates. These additions pay for schools, fire protection, water districts, flood control, libraries, and other services. The total rate you pay is the sum of all these layers. A property in one county might have a total rate of 1.15 percent, while a property in another county might have 1.25 percent or higher. Even within the same county, rates can vary by neighborhood if different school districts or special districts serve different areas.

Your property tax bill is calculated as: Assessed Value × Total Tax Rate = Annual Tax Bill. If your assessed value is $500,000 and your total tax rate is 1.2 percent, your bill is $6,000 per year.

How to find your assessed value and tax rate

Your county assessor's office maintains a public record of every property's assessed value and tax rate. You can search for your property online through your county assessor's website. Most counties allow you to search by address or parcel number and view the assessed value, the tax rate, and the calculated tax bill.

You will also receive a Notice of Assessment from your assessor each year. This document shows your assessed value for that tax year and the tax rate applied. If you do not receive one, or if you want to verify the information, you can contact your county assessor's office directly. The assessor's office is a public agency, and staff can answer questions about how your value was determined.

Your property tax bill itself comes from your county tax collector, not the assessor. The tax collector uses the assessed value and tax rate set by the assessor to calculate and send your bill. If you have a mortgage, your lender may collect property tax as part of your monthly payment and pay the tax collector on your behalf.

What happens if you think your assessed value is wrong

If you believe your assessed value is too high, you have the right to file an appeal with your county assessor. The appeal process is free and does not require a lawyer. You must file within a set time frame—usually by a important date in late summer or early fall of the year you are challenging. The exact important date varies by county, so check your county assessor's website or call their office to confirm.

To support your appeal, gather evidence that your property's value is lower than the assessed value. This might include a recent appraisal, a professional property valuation, sales prices of comparable homes in your area, or documentation of damage or needed repairs. The assessor will review your evidence and either uphold the assessed value, lower it, or ask you to provide more information.

If you disagree with the assessor's decision, you can file a second appeal with your county's Assessment Appeals Board. This is an independent body separate from the assessor's office. The Appeals Board holds a hearing where you can present your case. If you still disagree after that, you can pursue further legal action, though this is rare and usually involves hiring an attorney.

New construction and how it affects your assessed value

When you add new construction to your property—a deck, a pool, a room addition, or any permanent improvement—the assessor adds the value of that construction to your assessed value. The new construction is valued at current market rates, not at the discounted Proposition 13 rate.

For example, if your home has an assessed value of $400,000 and you build a $100,000 addition, your new assessed value becomes $500,000. The original $400,000 continues to grow at 2 percent per year, but the $100,000 addition also grows at 2 percent per year from the year it was added. Over time, the two portions grow together.

The assessor typically discovers new construction through building permits filed with your city or county. If you do unpermitted work, the assessor may still find out through aerial photography, property inspections, or neighbor reports. Unpermitted work can result in penalties in addition to the reassessment.

How Proposition 13 affects your tax bill over time

Proposition 13, passed in 1978, created the 2 percent annual cap on assessed value increases. This means that if you own your home for many years, your assessed value will fall further and further behind the market value. A home purchased for $300,000 in 2000 might have a market value of $800,000 today but an assessed value of only $450,000 because of the 2 percent annual limit.

This creates a situation where two identical homes on the same street can have very different tax bills. The homeowner who bought decades ago pays far less tax than the new buyer, even though they own the same property. This is by design under Proposition 13, which was intended to protect long-term homeowners from rising tax bills as their neighborhoods appreciated.

When a property is sold, the assessed value resets to the sale price, and the new owner's Proposition 13 cycle begins. This is why property tax bills often jump significantly after a sale, even though nothing physical changed about the house.

Frequently Asked Questions

Does my property tax bill include anything besides the assessed value and tax rate?

Your bill may include charges beyond the basic property tax calculation. Some counties add voter-approved bonds or assessments for specific improvements like street repairs or school construction. These appear as separate line items on your tax bill. Check your bill or contact your tax collector to understand each charge.

What if I inherit a property from a family member?

If you inherit a property from a parent or grandparent, you may be able to keep the low assessed value under Proposition 13's family transfer exclusion. You must file a claim with the assessor within a specific time frame, usually within three years of the death. The rules are complex and depend on your relationship to the deceased and the property's use. Contact your county assessor for details on whether you may have access to.

Can my property tax bill go down?

Yes, but only in specific situations. If you successfully appeal your assessed value, your bill will be lower going forward. If you remove structures or significantly damage your property, the assessor may lower the value. If your property is reassessed due to a sale or new construction, the new value could theoretically be lower than the old one, though this is uncommon in appreciating markets.

How often does my assessed value change?

Your assessed value increases by up to 2 percent automatically each year under Proposition 13. It can also change if you add new construction, if you file a successful appeal, or if the property is sold. Outside of these events, the 2 percent annual increase is the only change you will see.

Is property tax the same everywhere in California?

No. While the base rate is 1 percent statewide, the total rate varies by location because counties and local districts add their own rates on top. A property in one county might have a total rate of 1.1 percent, while an identical property in another county might have a rate of 1.3 percent or higher. This is why two homes with the same assessed value can have different tax bills depending on where they are located.