California Property Taxes Explained

California property taxes are based primarily on a home’s assessed value, not always its current market value. For most homeowners, the assessed value begins with the purchase price when the property is bought. After that, Proposition 13 generally limits annual increases in assessed value to no more than 2% per year, even if the home’s market value rises much faster.

That means two neighbors living in similar homes may pay very different property taxes simply because they purchased their homes at different times.

How California Property Taxes Work

The basic formula is:

The formula is simple, but California’s rules for determining assessed value are what make the system unique.

What Is Assessed Value?

Your home’s assessed value is the value your county uses to calculate property taxes.

For most homeowners:

• The assessed value begins as the purchase price.
• Proposition 13 limits annual increases to no more than 2%.
• The assessed value usually remains below market value until the property changes ownership.

What Is Proposition 13?

Proposition 13 is the foundation of California’s property tax system. Passed by voters in 1978, it generally limits the basic property tax rate to 1% of assessed value and limits annual increases in assessed value to no more than 2% per year.

This protection can create major tax savings for long-term homeowners, especially in areas where home prices have increased significantly.

Why Similar Homes Can Have Different Property Taxes

Two homes on the same street may have nearly identical market values but very different property tax bills.

California Property Tax Rates

California’s statewide base property tax rate is generally 1% of assessed value. However, most homeowners pay somewhat more because local voter-approved bonds, school district assessments, parcel taxes, and other local charges may be added to the bill.

As a result, many California homeowners see total property tax rates somewhere around 1.03% to 1.20%, depending on county and local taxing districts.

Homeowners’ Exemption

California offers a Homeowners’ Exemption for qualifying primary residences. This exemption reduces assessed value by $7,000.

The savings are modest, often around $70 to $90 per year, but qualifying homeowners should generally claim it.

Proposition 8 Decline-in-Value Relief

If your home’s market value falls below its Proposition 13 assessed value, California’s Proposition 8 may allow a temporary reduction in taxable value.

This is sometimes called a decline-in-value assessment. If market values later recover, the assessed value may rise again until it reaches the Proposition 13 limit.

Additional Charges Not Included in Basic Estimates

California property tax bills may include additional charges that vary by property and neighborhood, including:

• Mello-Roos taxes
• Community Facilities District charges
• Parcel taxes
• Special assessments
• Local bond measures

Because these charges are highly local, they may not be included in a general property tax estimate.

When California Property Taxes Are Due

California property taxes are generally paid in two installments:

• First installment: due November 1 and delinquent after December 10.
• Second installment: due February 1 and delinquent after April 10.

County tax collectors usually mail annual property tax bills before the first installment is due.