California property tax is based on the assessed value of your home, not its market value

California property tax is calculated on the assessed value of your property, which is usually much lower than what your home is actually worth. When you buy a home, the county assessor sets an initial assessed value based on the purchase price. That assessed value can increase by no more than 2 percent per year, even if your home's market value rises much faster. This is called the Proposition 13 cap, and it has been in place since 1978.

The property tax rate itself is set by your county and local agencies — school districts, fire departments, water districts, and others. The statewide base rate is 1 percent of assessed value, but your actual rate depends on which special districts serve your property. Most homeowners pay between 0.76 and 1.25 percent of assessed value annually, though some areas with many special districts pay more.

Your property tax bill arrives once or twice a year, depending on your county. The bill shows the assessed value, the tax rate applied, and the total amount due. If you disagree with the assessed value, you can file a Proposition 8 appeal with your county assessor's office, usually within 30 days of receiving your bill.

Key Takeaways

  • Property tax in California is 1 percent of assessed value at the state level, plus local district taxes that vary by location.
  • Your assessed value is locked to your purchase price and can rise only 2 percent per year under Proposition 13, regardless of market value.
  • The assessed value resets to current market value only when you sell the property or when ownership changes.
  • You can challenge your assessed value by filing a Proposition 8 appeal with your county assessor within 30 days of receiving your bill.
  • Property tax bills are mailed by your county assessor's office, and payment is usually due in two installments per fiscal year.

When your assessed value changes

Your assessed value stays the same year to year, increasing only by the 2 percent Proposition 13 cap, until one of two things happens: you sell the property, or ownership changes. When either occurs, the county assessor reassesses the property at its current market value. That new value becomes your new base, and the 2 percent annual increase starts over from there.

Ownership changes include transfers between spouses, transfers to a living trust if you are the beneficiary, and transfers to a revocable trust during your lifetime. Some transfers — such as gifts to children or transfers between family members — may may have access to for a Proposition 19 exclusion, which allows the property to keep its old assessed value. You must file for this exclusion with your county assessor within three years of the transfer, though some counties accept late filings.

If you refinance your mortgage, your assessed value does not change. Refinancing is not a change of ownership under California law, so your property keeps its current assessed value and continues to increase by 2 percent per year.

How your property tax bill is calculated

Your county assessor determines the assessed value. Your county tax collector then applies the tax rate — which includes the 1 percent state rate plus any local district rates — to that assessed value. The result is your annual property tax bill.

For example, if your home's assessed value is $500,000 and your total tax rate is 1.1 percent, your annual property tax is $5,500. If your county sends two bills per year, you would receive one bill for $2,750 in the fall (for the July–December period) and another for $2,750 in the spring (for the January–June period). Some counties use different fiscal year schedules, so check with your county tax collector's office for your specific due dates.

Your bill also may include supplemental assessments if your property was reassessed during the year — for instance, after you bought it. A supplemental bill covers the difference between the old assessed value and the new one, prorated for the remainder of the fiscal year.

Special assessments and Mello-Roos taxes

In addition to regular property tax, your bill may include special assessments or Mello-Roos taxes. These are separate charges levied by local districts to fund specific projects — such as street improvements, water system upgrades, or school construction. They appear as line items on your property tax bill.

Mello-Roos taxes are common in newer developments and can last 20 to 30 years or more. Unlike regular property tax, Mello-Roos taxes do not follow the 2 percent cap and can increase each year based on the terms of the district's bond. Before buying a home in a newer area, ask the seller or real estate agent whether Mello-Roos taxes explore, because they can add hundreds of dollars per year to your bill.

You can find out whether your property is subject to special assessments or Mello-Roos taxes by contacting your county assessor's office or by reviewing the property tax bill if you already own the home.

Property tax exemptions and reductions

California offers several exemptions that can reduce or eliminate property tax for certain owners. The homeowner's exemption reduces the assessed value of your primary residence by $7,000, which lowers your annual tax by roughly $70 to $77, depending on your local tax rate. You must file for this exemption with your county assessor, usually within the first 60 days after you buy the home, though some counties accept late filings.

Other exemptions include those for disabled veterans, blind persons, and properties owned by certain nonprofits or religious organizations. Each exemption has specific requirements and process important date. Contact your county assessor's office to learn which exemptions you may be able to use.

Senior homeowners may also be able to defer property taxes through the Property Tax Postponement Program, which allows those 61 and older to delay paying property tax until the home is sold or the owner passes away. This program has income and property value limits, and you must explore through your county assessor's office.

Appealing your assessed value

If you believe your assessed value is too high, you can file a Proposition 8 appeal with your county assessor. This appeal is based on the current market value of your property — if the assessed value exceeds what your home would sell for today, you have grounds to appeal. You typically have 30 days from the date your bill is mailed to file, though some counties allow longer periods.

To file an appeal, contact your county assessor's office and request a Proposition 8 appeal form. You will need to provide evidence of your property's current value, such as recent comparable sales in your area, a professional appraisal, or a real estate agent's market analysis. The assessor will review your evidence and either reduce the assessed value or uphold it. If you disagree with the result, you can appeal to the county Assessment Appeals Board.

Appeals are free to file, and there is no penalty for appealing. However, if your appeal is successful and your assessed value is reduced, the reduction applies only to the current year — the 2 percent annual increase resumes the following year from the new, lower base.

Property tax rates vary by location

Your total property tax rate depends on where your home is located. The state base rate is 1 percent, but your county, city, school district, water district, fire district, and other local agencies can add their own rates on top of that. A home in one part of California may have a total rate of 0.85 percent, while a home in another area may have a rate of 1.3 percent or higher.

To find your specific tax rate, check your property tax bill or contact your county tax collector's office. You can also search your county assessor's website, which usually lists tax rates by neighborhood or district. If you are considering buying a home in California, ask the seller's real estate agent for the current property tax bill so you can see the exact rate and total amount you would owe.

Frequently Asked Questions

What happens to my property tax if my home value drops?

Your assessed value does not automatically drop if your home's market value falls. However, you can file a Proposition 8 appeal if the assessed value exceeds the current market value. If approved, your assessed value is reduced for that year, and the 2 percent annual increase resumes from the new, lower base the following year.

Do I have to pay property tax if I own my home outright?

Yes. Property tax is owed by the property owner, whether or not there is a mortgage. If you own your home free and clear, you still receive a property tax bill from your county and must pay it. If you do not pay, the county can place a lien on your property or eventually foreclose.

Can I deduct California property tax on my federal income tax return?

You may be able to deduct California property tax on your federal return, but the deduction is limited to $10,000 per year for all state and local taxes combined (including income tax, sales tax, and property tax). Consult a tax professional to determine whether you benefit from itemizing deductions versus taking the standard deduction.

What is the difference between assessed value and market value?

Market value is what your home would sell for today. Assessed value is the value used to calculate your property tax, and it is usually much lower because it is based on your purchase price and can increase only 2 percent per year. The two values are equal only at the moment you buy the home.

How do I find out my property's assessed value?

Your assessed value appears on your property tax bill. You can also contact your county assessor's office or search their website, which usually has a public database where you can look up any property by address or parcel number.