California’s Prop 13 property tax rules are why two neighbors with similar homes can have very different tax bills. Prop 13 caps how much your assessed value can increase each year, which means the longer you’ve owned your home, the further your assessed value likely sits below its current market value.
Curious how your assessed value compares to today’s market? Get a free home value estimate to see the gap.
How Your Assessed Value Is Set
When you buy a home, the county assessor sets your assessed value at your purchase price. From there, Prop 13 limits annual increases to a maximum of 2%, regardless of how much your home’s actual market value rises.
What Triggers Reassessment
A sale or transfer of ownership typically triggers a full reassessment to current market value. New construction — including most additions and ADUs — triggers a partial reassessment on just the new square footage, not your entire property. See our ADU guide for how that applies if you’re adding a unit.
Prop 19: Transferring Your Tax Basis
If you’re 55 or older, severely disabled, or a wildfire/disaster victim, Prop 19 may let you transfer your existing assessed value to a new home anywhere in California, even if the new home costs more. Our Prop 19 calculator estimates the potential savings for your situation.
The Homeowners’ Exemption
Separate from Prop 13, California offers a modest reduction in assessed value for owner-occupied primary residences. See Filing for the Homeowners’ Property Tax Exemption for how to apply and the filing deadline.
Special Assessments and Mello-Roos
Some newer developments carry additional Mello-Roos taxes or special district assessments layered on top of the base Prop 13 rate, sometimes for decades. These are disclosed during a purchase but are easy to overlook — always check the full tax rate area, not just the 1% base rate, when budgeting for a home.
Appealing Your Assessment
If you believe your assessed value is too high — for example, right after a purchase during a declining market — you can file an assessment appeal with your county. Deadlines and procedures vary by county, so check with your local assessor’s office for specifics and filing windows.
Reading Your Tax Bill
Your annual bill typically includes your base Prop 13 tax rate (1% of assessed value) plus voter-approved local bonds, parcel taxes, and special assessments, which vary by city and school district across Fremont, Milpitas, San Jose, Santa Clara, Union City, and Newark. The California State Board of Equalization publishes detailed FAQs on how assessments and exemptions work statewide.
Prop 13 for Inherited Property
Since Prop 19 took effect in 2021, most inherited homes are reassessed to market value when transferred to a child or grandchild, unless the heir moves in as their primary residence and the value increase is below a set threshold. This is a meaningful change from the old rules, and it’s worth reviewing closely with a tax professional if you’ve inherited or expect to inherit property.
Supplemental Tax Bills
After a purchase or reassessment, expect a one-time supplemental tax bill covering the gap between the old and new assessed value for that partial tax year. This catches many new owners by surprise, so budget for it separately from your regular annual bill.
If You’re Weighing a Move
Many long-time owners hesitate to sell because moving means giving up a low assessed value — but Prop 19 changes that math for eligible owners. Our Should I Sell Now or Wait guide walks through how to weigh a low tax basis against your other goals. For the full picture, see our Owning a Home in the Bay Area guide.
This article is for general informational purposes only and is not tax or legal advice. Property tax rules are specific to your county and situation — please consult your county assessor or a licensed tax professional.
Laxmi Penupothula · Intero Real Estate · DRE #02047105 · Serving Fremont, Milpitas, San Jose, Santa Clara, Union City & Newark. Equal Housing Opportunity.