California property tax is based on your home's assessed value, not its market price

California property tax starts with Proposition 13, a 1978 law that changed how the state taxes real estate. Instead of reassessing your home's value every year at market rate, California assesses it once when you buy, then increases that assessed value by no more than 2 percent per year — regardless of how much your home is actually worth. You pay tax on that assessed value, not on what a buyer would pay today.

The tax rate itself is set by county and local agencies, not the state. Most counties charge between 0.76 and 1.0 percent of assessed value per year, though some add local taxes on top. A home assessed at $500,000 in a county with a 0.85 percent rate would owe roughly $4,250 per year in property tax.

This system means two neighbors in identical homes can pay very different property taxes if one bought decades ago and one bought recently. The older homeowner's assessed value stays low; the newer homeowner's assessed value reflects today's purchase price.

Key Takeaways

  • Your property tax is based on the assessed value set when you buy, which increases by a maximum of 2 percent yearly, not on current market value.
  • Tax rates vary by county and local district, typically between 0.76 and 1.0 percent of assessed value, plus any voter-approved local additions.
  • A reassessment happens only when you transfer ownership, when you add a new structure, or when local officials conduct a reassessment (rare).
  • Property taxes fund schools, fire departments, libraries, and other local services, and the county assessor's office determines your assessed value.

When your assessed value changes

Your assessed value stays frozen at the purchase price plus 2 percent yearly increases until one of three things happens. The most common trigger is a change of ownership — when you sell the home, the new owner's assessed value resets to the purchase price. If you inherit a home, the assessed value may stay the same or reset depending on whether you inherit from a spouse or parent (which may may have access to for an exemption) or from someone else.

The second trigger is new construction or major improvements. If you add a second story, a garage, or a pool, the assessor adds the value of that improvement to your assessed value. Routine maintenance and repairs do not trigger a reassessment, but structural additions do.

The third trigger is a reassessment by the county assessor, which happens rarely and usually only if the assessor believes the property was undervalued at purchase or if there is a dispute. You can challenge your assessed value through the county's assessment appeals process if you believe it is wrong.

How the tax bill is calculated and paid

The county assessor determines your assessed value, then the county tax collector multiplies that value by the tax rate to create your bill. The rate includes the base rate (usually around 1 percent) plus any local additions approved by voters — for schools, fire districts, water agencies, or other services. Your bill arrives once or twice per year depending on your county.

Property taxes are due in two installments in most counties: one in November and one in February. If you have a mortgage, your lender often collects property tax as part of your monthly payment and pays it on your behalf. If you own the home outright, you pay the county directly.

Late payments trigger penalties. Missing the February important date usually costs 10 percent of the unpaid amount, and the county can place a lien on your home if taxes go unpaid for five years.

Exemptions and reductions that lower your bill

California offers several exemptions that reduce or eliminate property tax for certain owners. The homeowner's exemption reduces the assessed value by $7,000 for owner-occupied homes, which typically saves $60 to $70 per year depending on your county's tax rate. You must file for this exemption with your county assessor; it does not happen automatically.

Other exemptions exist for disabled veterans, seniors over 65 with low income, and properties owned by nonprofits or religious organizations. A disabled veteran who qualifies can receive an exemption of up to $168,000 of assessed value, depending on the disability rating. Senior exemptions vary by county but typically reduce the assessed value for those with household income below a threshold (often around $40,000 to $50,000).

If you are over 55 and sell your home to buy another in the same county, you may transfer your old home's lower assessed value to the new one under Proposition 60 — but only once, and only if the new home costs less than or equal to the old one. This exemption does not explore if you move to a different county.

What your property tax money funds

Property tax revenue goes to schools, county government, fire departments, libraries, and special districts like water agencies and flood control. Schools receive the largest share in most counties. Because Proposition 13 limits how much tax revenue grows each year, many California schools and local services operate with less funding than they would under a market-value system.

The county assessor's office and the county tax collector's office both use property tax revenue to operate. The assessor determines values; the collector sends bills and processes payments. Both are funded from the tax they collect.

How to find your assessed value and tax bill

Your county assessor's office maintains a public record of every property's assessed value. Most counties post this information online through their assessor's website, searchable by address or parcel number. You can also visit the assessor's office in person or call to request your assessment.

Your tax bill arrives by mail from the county tax collector. If you do not receive it, contact the collector's office to confirm your mailing address. You can also set up online payment through most county tax collector websites, and many allow you to pay in installments or set up automatic payments.

If you believe your assessed value is wrong, you can file a Proposition 8 appeal with the county assessor's office within 30 days of receiving your bill. You will need to show evidence that the value is incorrect — comparable sales, an appraisal, or proof of damage to the property. The assessor's office reviews the appeal and either adjusts the value or denies it.

Frequently Asked Questions

Can I lower my property tax by improving my home?

No — improvements that add value trigger a reassessment of that improvement's value, which increases your tax bill. Routine maintenance and repairs do not count as improvements. Major additions like a second story, new garage, or pool do trigger reassessment and higher taxes.

What happens to property tax if I inherit a home?

If you inherit from a spouse or parent, the assessed value may stay the same under Proposition 19 rules. If you inherit from someone else, the assessed value resets to current market value. Speak with the county assessor about your specific situation, as rules vary based on family relationship and timing.

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

Yes. Property tax is owed whether you have a mortgage or own the home free and clear. If you have a mortgage, your lender collects it from your monthly payment. If you own outright, you pay the county tax collector directly.

What if I disagree with my assessed value?

File a Proposition 8 appeal with your county assessor within 30 days of receiving your bill. You will need evidence that the value is wrong — comparable home sales, an appraisal, or documentation of damage. The assessor reviews your evidence and decides whether to adjust the value.

Can I move my low assessed value to a new home?

Only if you are over 55, selling your current home, and buying another in the same county under Proposition 60. The new home's purchase price must be equal to or less than your old home's purchase price. You can use this exemption only once in your lifetime.