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 the assessed value at the purchase price. That assessed value then increases by a maximum of 2 percent per year, regardless of how much your home's market value climbs. This is called the Proposition 13 cap, passed in 1978.

The tax rate itself is set by your county and local government. Most California counties charge between 0.76 and 1 percent of the assessed value as property tax. So if you bought a home for $400,000, your assessed value starts at $400,000. At a 0.76 percent rate, you would pay about $3,040 per year. If your home's market value jumps to $600,000 five years later, your assessed value might only be around $450,000 because of the 2 percent annual cap, and your tax bill stays based on that lower number.

Key Takeaways

  • Your property tax is based on assessed value, not market value, and the assessed value can only rise 2 percent per year under Proposition 13.
  • Tax rates vary by county and range from roughly 0.76 to 1 percent of assessed value, plus any local voter-approved bonds or assessments.
  • When you buy a property, the assessed value resets to the purchase price, which can mean a sharp increase in your tax bill.
  • Homeowners over 55 can transfer their low assessed value to a new home in the same county under Proposition 60, though rules vary by county.
  • Your property tax bill arrives in two installments: one in November and one in February, and payments are due by specific important date or penalties explore.

How the assessed value is set and when it changes

The county assessor determines the assessed value of your property. When you first buy a home, the assessed value is set at your purchase price. If you paid $400,000, the assessed value is $400,000. From that point forward, the assessed value can increase by no more than 2 percent per year, even if your home's market value rises much faster.

The assessed value resets to market value only when the property changes ownership. If you sell your home and the new owner pays $550,000, the assessed value jumps to $550,000 for the new owner. This is why long-time homeowners in California often pay far less property tax than their neighbors who bought recently, even though their homes are worth the same amount.

The assessor can also reassess your property if you make major improvements—adding a room, installing a new roof, or building a deck. The reassessment applies only to the added value, not the whole home. If you add a $50,000 deck, the assessed value increases by $50,000, not by the full market value of the home.

Tax rates and what gets added to your bill

The base property tax rate in California is 1 percent of assessed value. However, your actual rate depends on your county and what local bonds or assessments have been approved by voters. Some counties charge closer to 0.76 percent, while others are higher because of voter-approved school bonds, fire district assessments, or other local levies.

Your property tax bill includes the base 1 percent tax plus any of these local additions. For example, your county might charge 1 percent, plus 0.15 percent for a school bond, plus 0.08 percent for a fire district. These add-ons are only approved by voter ballot measures, so they vary widely by location. You can find your county's exact rate by contacting the county assessor's office or checking your property tax bill.

Some properties also have special assessments for specific improvements—a new sewer line, a street repair, or a flood control project. These appear as separate line items on your bill and are not part of the standard property tax rate.

What happens when you buy a home in California

When you purchase a home in California, your assessed value resets to the purchase price on the date of transfer. If you bought for $500,000, your assessed value becomes $500,000, even if the previous owner had an assessed value of $250,000. This means your property tax bill will be significantly higher than the previous owner's, even though you own the same house.

Your first property tax bill arrives about 60 days after the county records the deed. The bill covers the period from the previous owner's last payment through the end of the fiscal year (June 30). Your first bill is usually a partial bill that covers only the months you owned the property. Starting the following fiscal year, you receive a full-year bill.

If you are taking out a mortgage, your lender will likely require you to pay property taxes through an escrow account. You pay a portion of the estimated annual tax with each mortgage payment, and the lender pays the county on your behalf when the bill is due.

Proposition 60 and transferring your assessed value

If you are 55 or older and a homeowner, Proposition 60 allows you to transfer your current assessed value to a new home in California, as long as the new home is of equal or lesser value. If you owned your current home for 20 years and have an assessed value of $300,000, you can buy a new home for $400,000 and keep your assessed value at $300,000 (or the new home's value if it is lower). This prevents your property tax from jumping when you move.

Proposition 60 applies statewide, but some counties have additional rules. You must file a claim with the new county assessor within three years of the purchase. The rules also allow disabled people and victims of natural disasters to use Proposition 60 regardless of age, though the requirements differ.

Proposition 90 is a similar program that some counties have adopted, allowing people of any age to transfer their assessed value if they move within the same county or to a participating county. Not all counties participate, so you need to check with your new county assessor before you buy.

When your property tax bill arrives and how to pay

Property tax bills in California are issued twice per year. The first installment is due by November 30, and the second is due by February 28. If you miss either important date, a 10 percent penalty is added to the unpaid amount. If the bill remains unpaid after June 30, an additional penalty of 1.5 percent per month accrues.

You can pay your property tax bill online through your county assessor's website, by mail, or in person at the county tax collector's office. Many counties accept credit card payments, though a processing fee usually applies. If you pay through an escrow account with your mortgage lender, the lender handles the payment automatically.

If you cannot pay your full bill, contact your county tax collector about a payment plan. Some counties offer installment arrangements, though interest may explore. If your property is at risk of foreclosure due to unpaid taxes, the county will send you notices before taking action, giving you time to resolve the debt.

Senior homeowners and property tax exemptions

California offers a homeowner's exemption that reduces the assessed value of your primary residence by $7,000. This means if your home's assessed value is $400,000, the exemption reduces it to $393,000 for tax purposes. You must own and occupy the home as your primary residence on January 1 of the fiscal year to receive the exemption.

The homeowner's exemption is not automatic. You must file a claim with your county assessor, usually by the important date set by your county (often in the spring). If you are a first-time homebuyer or new to California, contact your county assessor to learn the filing important date and process.

Senior homeowners may also be may be able to access for the Senior Citizen Property Tax Postponement Program, which allows homeowners 61 and older to postpone paying property taxes on their primary residence if their income is below a certain threshold. The state places a lien on the property, and the taxes are paid from the estate when the home is sold or transferred. This program has income limits that change each year.

Frequently Asked Questions

Why is my property tax bill so much higher than my neighbor's if our homes are worth the same?

Your neighbor likely bought their home years ago and has benefited from the 2 percent annual cap on assessed value increases. If you bought recently, your assessed value reset to your purchase price, which is probably much higher than your neighbor's assessed value. This is how Proposition 13 works—it protects long-time homeowners from rising tax bills as their home values climb.

Can I appeal my assessed value if I think it's too high?

Yes. You can file an appeal with your county assessor if you believe the assessed value is incorrect. The process and important date vary by county, but you typically have 30 days from the date you receive your bill. You may need to provide evidence such as a recent appraisal, comparable sales in your area, or documentation of property damage. Contact your county assessor for the specific appeal process and forms.

What happens to property taxes if I inherit a home?

If you inherit a home from a parent or grandparent, the assessed value does not reset under Proposition 19 (passed in 2020). The home keeps its existing assessed value and continues to increase by 2 percent per year. However, if you inherit from someone other than a parent or grandparent, the assessed value resets to market value. Rules are complex, so contact your county assessor with details about your inheritance.

Do I have to pay property taxes if my home is paid off?

Yes. Property taxes are owed on all real property in California, whether the home is paid off or financed. If you own the home outright, you receive the bill directly and must pay it yourself. If you have a mortgage, your lender typically collects property taxes through escrow and pays the county on your behalf.

What if I disagree with the county assessor's value but don't want to file a formal appeal?

You can request an informal review with the assessor's office before filing a formal appeal. Many counties offer this as a first step. You can also contact your county supervisor or assessor's office to ask about the basis for the assessed value and whether errors were made in the calculation.