California uses a fixed assessment rate tied to purchase price, not current market value

California property tax is calculated by taking the assessed value of your property — usually the price you paid for it — and multiplying it by the statewide tax rate of 1%. That 1% goes to the county assessor, schools, and local services. The key difference from most states is that your assessed value does not change every year based on what your home is worth now. It stays locked at the purchase price and rises only 2% per year, no matter how much your neighborhood appreciates.

This system comes from Proposition 13, passed in 1978. When you buy a property, the county assessor records the sale price as the "full cash value." That becomes your base. Each year after, the assessor can increase it by up to 2%, but only if inflation warrants it — and only up to that cap. If your home doubles in value over ten years, your assessed value does not double. It rises by roughly 2% per year, period.

The moment you sell, the assessed value resets to the new purchase price. This is called a "change in ownership." A new buyer pays tax on what they paid; the previous owner's locked-in rate ends. This is why two identical houses on the same block can have vastly different tax bills.

Key Takeaways

  • Your assessed value is almost always your purchase price, not your home's current market value, and it increases by no more than 2% per year.
  • The statewide tax rate is 1% of assessed value, but your actual bill includes county, city, school, and special district levies that vary by location.
  • When you buy a property, the assessed value resets to the new purchase price; when you own it, the value is locked in and rises slowly.
  • Certain transfers — between spouses, from parent to child, or between siblings in some cases — may avoid triggering a reassessment under Proposition 13 rules.
  • Your property tax bill includes the 1% base rate plus voter-approved bonds and special assessments that are specific to your county and district.

The 1% base rate plus local add-ons

The statewide rate of 1% is the floor, not the ceiling. On top of that base, counties, cities, school districts, and special districts can add their own levies. These are usually voter-approved bonds or ongoing assessments for schools, fire protection, water, or flood control. Your actual tax rate can be 1.1%, 1.3%, or higher depending on where you live and what local measures have passed.

When you receive your property tax bill, it will show the breakdown: the 1% base, then each local levy listed separately. A home in Los Angeles County might pay 1% base plus 0.15% for schools, 0.05% for a fire district, and 0.08% for a water bond — totaling roughly 1.28%. The same home in a rural county with fewer levies might total 1.05%. The difference is entirely local.

These add-ons change when voters pass new bonds or when old ones expire. Your tax bill can shift year to year, even if your assessed value does not. The county assessor's office publishes the current rate for your specific parcel; you can find it on the county website or ask the assessor directly.

How the assessed value increases each year

After you buy, the assessor increases your assessed value by up to 2% annually. The increase is tied to the California Consumer Price Index (CPI). If inflation is 1.5%, your assessed value rises 1.5%. If inflation is 0.2%, it rises 0.2%. The cap is 2%, so even in a high-inflation year, your assessed value cannot jump more than 2%.

This means a home purchased for $500,000 in 2015 would have an assessed value of roughly $552,000 in 2024, assuming 2% annual increases. The same home might be worth $750,000 on the open market, but you pay tax only on $552,000. A buyer purchasing that same home today would pay tax on $750,000, and their assessed value would then rise 2% per year from that new base.

The assessor does not send you a notice every year showing the 2% increase — it happens automatically. You will see the new assessed value on your property tax bill. If you believe the increase is wrong or if your property was damaged and should be reassessed downward, you can file a Proposition 8 application with the assessor.

What triggers a reassessment to current market value

A reassessment happens when there is a "change in ownership." The most common trigger is a sale. When the deed transfers to a new owner, the county assessor records the sale price and that becomes the new assessed value. The new owner's tax bill jumps to reflect the current market price, and their 2% annual increases start from that new base.

Other transactions can trigger reassessment too. A transfer into a trust, a gift to someone other than a spouse or child, a transfer between business partners, or a foreclosure all count as changes in ownership. The assessor's office receives notice from the county recorder and initiates the reassessment automatically.

Some transfers do not trigger reassessment. Transfers between spouses are exempt. Transfers from a parent to a child (or between siblings in limited cases) are exempt under Proposition 19, though there are income and use restrictions. A transfer to a revocable living trust during your lifetime is also exempt. If you think your transfer should be exempt, you must file a claim with the assessor within the deadline — usually three years from the transfer date, though rules vary.

Calculating your actual tax bill

To find your property tax bill, multiply your assessed value by your local tax rate. If your assessed value is $600,000 and your local rate is 1.25%, your annual tax is $7,500. Divide by 12 for a rough monthly amount, though bills are usually paid in two installments (November and February in most counties).

Your bill will also include any special assessments — one-time or ongoing charges for specific improvements like a new sewer line, street repair, or fire suppression equipment. These are separate from the property tax rate and vary widely by location and project. Some assessments last one year; others last 20 years or more.

You can estimate your bill using the county assessor's online tools or by calling the assessor's office. Many counties have searchable databases where you enter your address and see the assessed value, tax rate, and estimated bill. The county tax collector's office can also provide a bill estimate or a copy of your last bill if you need to see the exact breakdown.

Exemptions and reductions that lower your bill

California offers several exemptions that reduce assessed value or eliminate tax entirely. The homeowner's exemption reduces the assessed value of a primary residence by $7,000 (as of 2024; this amount adjusts annually for inflation). If your assessed value is $600,000, the exemption brings it down to $593,000 for tax purposes. You must file for this exemption with the assessor; it does not happen automatically.

Senior citizens, disabled persons, and veterans may be may be able to access for additional reductions or exemptions. A senior or disabled homeowner can defer property taxes until the home is sold or the estate is settled. A disabled veteran may receive an exemption on a portion of the home's value. Each program has income limits and specific requirements. The assessor's office has applications and can tell you whether you meet the criteria.

Agricultural land, open space, and wildlife habitat may also receive lower assessments under Williamson Act contracts or similar programs. If your property qualifies, you file an application with the assessor. The reduced assessment lasts as long as the land is used for the may have access to purpose; if you change the use, the assessment goes back up and you may owe back taxes plus penalties.

Frequently Asked Questions

Why is my neighbor's tax bill so different from mine if we have the same house?

They likely paid a different price when they bought. Under Proposition 13, assessed value is locked to purchase price. If your neighbor bought five years ago and you just bought, their assessed value is much lower even though the house is identical. When they sell, their assessed value resets to the new sale price.

Can I appeal my assessed value if I think it is too high?

Yes. File a Proposition 8 application with the county assessor if you believe the assessed value exceeds the market value of your property. You will need evidence — recent appraisals, comparable sales, or photos of damage or needed repairs. The deadline is usually the last day of the assessment year (often July 2). If denied, you can appeal to the county assessment appeals board.

What happens to property tax if I transfer my home to my child?

Under Proposition 19, a transfer from parent to child does not trigger reassessment if the child uses it as a primary residence and meets income limits. However, if the child later sells or rents it out, the assessed value resets to market value. You must file a claim with the assessor to claim the exemption; it does not happen automatically.

Does my property tax bill include school taxes?

Yes. School funding is part of the local levies added to the 1% base rate. Your bill shows the school district portion separately, but it is included in the total you owe. The school district's share varies by county and district; some are higher than others.

When do I pay property taxes, and what happens if I miss a payment?

Most California counties bill in two installments: one due in November, one due in February. If you miss a payment, penalties and interest accrue. After five years of non-payment, the county can foreclose and sell the property. If you are having trouble paying, contact your county tax collector about payment plans or deferrals, especially if you are a senior or disabled homeowner.