California does not tax homes on what they would sell for today. Under Proposition 13, a property’s taxable value usually starts at its market value when it was bought or built, and that figure then grows by a limited amount each year. Proposition 19 later changed who can keep or move a low assessed value. This guide covers how the rate and the base-year value work, what triggers a reassessment, how temporary decline-in-value reductions operate, and what Proposition 19 allows.

The rate: 1% plus voter-approved debt

Proposition 13 added Article XIII A to the state constitution in 1978. The State Board of Equalization’s overview, Publication 29, California Property Tax: An Overview (opens in a new tab), explains that the general levy is 1% of taxable value. On top of that, a county can add only rates needed to repay certain debt: obligations incurred before July 1, 1978; bonds for buying or improving real property approved by two-thirds of voters after that date; and certain school facility bonds approved by 55% of voters. These add-on rates differ from one area to another within the same county. That is why two houses with the same assessed value can have different total rates.

Special assessments, Mello-Roos charges, and other direct charges can also appear on the bill. They are not part of the ad valorem rate. The assessor sets the value, the auditor-controller computes the tax, and the tax collector bills and collects it. The BOE’s property tax bill FAQ (opens in a new tab) explains which office handles which question.

Base-year value and the 2% limit

Each property has a base-year value. It is the market value as of the 1975 roll, or the market value when the property last changed ownership or when new construction was completed. Every January 1 lien date, the assessor adjusts that base by inflation. The BOE’s decline-in-value explanation (opens in a new tab) describes the adjustment as the lower of the change in the California Consumer Price Index or 2%. The adjusted figure is called the factored base-year value.

Because increases are capped, longtime owners often have assessed values far below market. Publication 29 notes that similar homes can carry very different tax bills only because they were bought at different times. Completed new construction is the other event that triggers a reappraisal.

Hypothetical worked example

The following numbers are invented for illustration and are not a current rate for any county. A buyer purchases a home for $600,000, so the base-year value is $600,000. Assume the full 2% factor applies for two years:

  • Year 2: $600,000 × 1.02 = $612,000
  • Year 3: $612,000 × 1.02 = $624,240

In year 3, the owner occupies the home and has the $7,000 homeowners’ exemption. Assume a combined rate of 1.15% (the 1% levy plus an invented 0.15% for local bonds):

($624,240 − $7,000) × 0.0115 = $7,098.26, before any fixed charges or special assessments.

Change in ownership: when the value resets

Value resets to market when ownership changes or new construction is completed. The BOE’s change in ownership FAQ (opens in a new tab) says a change in ownership is not limited to sales. Gifts, inheritances, trust transfers, adding or removing an owner, and property settlements can all qualify, with or without payment. Only the share that changes hands is reassessed: if 50% transfers, half the property gets a new value and half keeps its old base.

Some transfers are excluded automatically, such as transfers between spouses and transfers into a revocable trust for the owner’s benefit. Others, like the parent-child transfers discussed below, are excluded only if a claim is filed. Assessors review recorded deeds, so the reassessment usually follows the recording.

A purchase also produces supplemental assessments, which bill the difference between the old and new value for the rest of the fiscal year. Publication 29 explains that an event between January 1 and May 31 produces two supplemental assessments, so a buyer can receive more than one extra bill in the first year.

Proposition 8: temporary decline-in-value reductions

Proposition 8, passed in November 1978, allows a temporary reduction when market value on January 1 falls below the factored base-year value. In that case the assessor enrolls the lower market value. The BOE explains that a property in decline-in-value status is reviewed each year. Its assessment can rise by more than 2% in a single year as the market recovers, but it cannot exceed the factored base-year value unless there is a new change in ownership or new construction.

Continuing the hypothetical: if the year-3 home above has a market value of $580,000 on January 1, the assessor would enroll $580,000 rather than $624,240. If the market rebounds, the assessment can climb back toward the factored base-year value faster than 2% a year.

Many assessors review values on their own initiative, but you can also ask for a review. The Orange County Assessor’s decline in market value page (opens in a new tab) accepts informal review requests from January 1 through April 30. It also notes that sales through March 31 are considered in setting market value. If the informal route fails, the formal path is an assessment appeal on county form BOE-305-AH. The regular filing period runs from July 2 through September 15 or November 30, depending on the county. The BOE’s assessment appeals FAQ (opens in a new tab) covers the process. The most persuasive evidence is usually sales of comparable homes close to the January 1 lien date. Our appeal preparation guide explains how to assemble it.

Proposition 19: moving a base-year value

Voters approved Proposition 19 on November 3, 2020. Its base-year value transfer rules became operative April 1, 2021. The BOE’s Proposition 19 page (opens in a new tab) summarizes who can move a factored base-year value to a replacement primary residence:

  • Homeowners age 55 or older (claim form BOE-19-B) and severely and permanently disabled homeowners (BOE-19-D with certificate BOE-19-DC). The replacement may be anywhere in California and may be bought or built up to two years before or after the original home is sold. An eligible person may use the transfer up to three times.
  • Victims of wildfire or a natural disaster declared by the Governor (BOE-19-V), for a principal residence that was substantially damaged or destroyed, under the same two-year timing.

The replacement can cost more than the original, but the difference is added to the transferred value. The “equal or lesser value” test is 100% of the original’s market value if the replacement is bought first, 105% if bought within the first year after the sale, and 110% within the second year. Claims go to the assessor of the county where the replacement home sits, within three years of buying it or completing it. The BOE notes that this is done by claim after both transactions close and you live in the new home, not through escrow.

Proposition 19: parent-child transfers changed

For transfers on or after February 16, 2021, the parent-child exclusion (and the grandparent-grandchild version, when the middle-generation parents are deceased) is much narrower than under the old Propositions 58 and 193:

  • Only a family home or family farm qualifies. Other real estate, such as rentals or vacation homes, no longer qualifies for the exclusion.
  • A family home must have been the parent’s principal residence and must become the child’s principal residence. The child must file for the homeowners’ exemption (BOE-266) or the disabled veterans’ exemption within one year of the transfer. A later filing applies the exclusion only going forward.
  • The exclusion is capped at the factored base-year value plus an inflation-adjusted $1 million. The BOE lists that amount as $1,044,586 for transfers from February 16, 2025, through February 15, 2027. Value above the cap is added to the base.
  • The claim (BOE-19-P for parent-child, BOE-19-G for grandparent-grandchild) is due within three years of the transfer or date of death, or before the property passes to a third party, whichever comes first.

Hypothetical example (invented figures): a parent’s home has a factored base-year value of $300,000 and a market value of $1,500,000 when transferred in 2026. The limit is $300,000 + $1,044,586 = $1,344,586. The excess of $155,414 is added, so the child’s new base-year value is $455,414. That is still far below the $1,500,000 a buyer would be assessed at. For other issues heirs face, see our inherited property guide.

The homeowners’ exemption

The constitution provides a $7,000 reduction in taxable value for an owner-occupied principal residence on the January 1 lien date. Rentals and vacation homes do not qualify. According to the BOE’s homeowners’ exemption page (opens in a new tab), you file form BOE-266 once with the county assessor. Filing by February 15 secures the full exemption for that year. The Orange County Assessor (opens in a new tab) notes that a claim filed by December 10 receives 80%, or $5,600. You must tell the assessor when you no longer qualify, and December 10 is the last day to end the exemption without penalty. At an assumed 1.1% rate, the exemption would reduce the bill by about $77 a year ($7,000 × 0.011). The same filing is also what a parent-child family-home exclusion depends on.

Common mistakes

  • Assuming a sale price triggers only the next annual bill; supplemental bills follow most purchases.
  • Treating Proposition 8 reductions as permanent. They are reviewed each year.
  • Inheriting a rental from a parent and expecting the old base-year value to continue. Since February 16, 2021, it generally does not.
  • Missing the one-year exemption filing that a parent-child family-home exclusion depends on.

Find your county assessor, tax collector, and appeals board through the California county directory, for example Los Angeles County or Orange County. For background on the different value figures, see assessed vs. market vs. taxable value.

Sources reviewed October 13, 2026. This is a general summary of California rules; claim eligibility, county deadlines, and local rates vary, and the BOE notes that the text of Proposition 19 and its implementing statutes control.