Proposition 13: keeping Property Taxes low for Californians

While other States can experience drastic rises in the yearly Property Taxes, Californians are lucky to see only a maximum 2% increase in their Property Taxes per year because of Proposition 13. Read below:

Under Proposition 13, the annual real estate tax on a parcel of property is limited to 1% of its assessed value. This "assessed value," may be increased only by a maximum of 2% per year, until and unless the property undergoes a change in ownership. At the time of the change in ownership the low assessed value may be reassessed to full current market value which will produce a new base year value for the property, but future assessments are likewise restricted to the 2% annual maximum increase of the new base year value.

If the property's market value increases rapidly (values of many detached dwellings in California appreciated at annual rates averaging more than 10% in the decade ending in 2005) ^[6] or if inflation exceeds 2%, ^[7][8] the differential between the owner's taxes and the taxes a new owner would have to pay can become quite large.

The property may be reassessed under certain conditions other than a change in ownership, such as when additions or new construction occur. The assessed value is also subject to reduction if the market value of the property declines below its assessed value, for example, during a real estate slump. Reductions in property valuation were not provided for in Proposition 13 itself, but were made possible by the passage of Proposition 8 (SCA No. 67) in 1978 which amended Proposition 13. Such a real estate slump and downward reassessments occurred in 2009 when the State Board of Equalization announced an estimated broad scale reduction in property tax base year values due to negative inflation. ^{[9] [10]} Property tax in California is an Ad valorem tax meaning that the tax assessed (generally) rises and falls with the value of the property.

The Original Article can be read in it's entirety HERE

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