California specifics
Proposition 13 property tax model
Model the factored base-year value, 1% statewide rate, voter-approved debt and direct assessments without pretending a general calculator can reproduce a county tax bill. The annual inflation factor is capped at 2%, not fixed at 2%.
Your figures
Use the base-year value from the assessment record. After an ordinary arm's-length purchase, this is usually the property's market value at transfer, but exclusions and partial changes can produce a different result.
This projects forward from the starting assessment. A qualifying change in ownership or new construction creates a new base-year value for the affected interest.
The annual adjustment is capped at 2% and can be negative. This model repeats the entered rate each year; actual annual factors vary. Use 2% only when the exercise asks for the maximum increase.
Bonds approved by voters sit on top of the 1% base. This varies by parcel, so take it from a real tax bill or a county lookup rather than guessing.
Enter the annual dollar total of applicable parcel assessments and special taxes. These are separate from the 1% ad valorem limit and follow their own rules.
Estimated annual tax in year 10
$11,215
Using a 2% annual factor. The 1% base is statewide. Voter-approved debt and direct assessments are parcel-specific.
From the 2% factor you entered. This is not a county assessment.
After 10 years, a 2% annual factor produces $975,196. A real assessment can be lower under Proposition 8 when market value falls below the factored base-year value, and can later rise by more than 2% while recovering, but never above the factored base-year value absent a reassessable event.
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How this is calculated
A reassessable change in ownership generally establishes a new base-year value at fair market value for the interest transferred. Each year that value is adjusted by the statutory inflation factor, which cannot exceed 2%. This model compounds the factor you enter.
The base tax is 1% of that assessed value, and it is constitutional. Everything above it is local. Voter-approved bond measures are expressed as a percentage and vary by parcel. Enter applicable parcel assessments and special taxes, such as Mello-Roos, as annual dollar amounts in this model. They are separate from the 1% ad valorem limit and have their own authorization and calculation rules. Their amounts can change; they are not exempt from every provision of Proposition 13.
A county enrolls the lower of current market value and the factored base-year value. A temporary Proposition 8 reduction can therefore move by more than 2% in a recovery year, but it cannot rise above the factored base-year value unless a reassessable event occurs. New construction creates a separate base-year value for the added work.
For the exam, the three facts worth holding are the 1% base rate, the 2% maximum annual factor, and the fact that a reassessable transfer generally creates a new base-year value at market. Transfer of Property is where this is tested.
Common questions
What is the property tax rate in California?
The Proposition 13 statewide base rate is 1% of assessed value. The rate needed for voter-approved bonded debt and parcel-specific direct assessments, including Mello-Roos where applicable, sit on top. The actual total therefore has to be checked on the parcel's tax bill.
How much can California property tax go up each year?
A Proposition 13 factored base-year value uses the statutory inflation factor, capped at 2% a year. It is not automatically 2%. A temporary Proposition 8 assessment can rise by more than 2% as market value recovers, but not above the factored base-year value unless a reassessable event occurs.
What triggers a property tax reassessment in California?
A reassessable change in ownership generally creates a new base-year value at current fair market value for the interest transferred. New construction creates a new base-year value for the value added. Statutory exclusions can prevent or limit reassessment, so not every transfer produces a full reset.
Does the Proposition 13 1% limit include Mello-Roos?
No. Mello-Roos is a special tax levied in a Community Facilities District, not an ad valorem tax, so the 1% limit does not apply to it. It can add substantially to a bill in a newer development, and a seller must make a good-faith effort to deliver a notice of the special tax to a prospective buyer.