Prop 13

Proposition 13 is a California constitutional amendment passed in 1978 that fundamentally changed how property taxes work in the state. It limits the property tax rate to 1% of assessed value and caps annual assessment increases at 2%.

The biggest impact: Your assessed value is based on your purchase price, not current market value. This means long-time homeowners often pay far less than recent buyers—even for identical homes next door.

Properties are only reassessed to market value when sold or when new construction occurs. Otherwise, your assessed value can only increase by a maximum of 2% per year, regardless of how much the market rises.

Prop 13 is a double-edged sword for California homeowners. If you've owned your home for years, you're protected from massive tax increases even as values skyrocket. But if you recently bought, you're paying based on today's inflated prices.

Here's where appeals come in: Even under Prop 13, you can appeal if your assessed value exceeds your home's current market value. This typically happens when:

• You bought at the peak and values dropped

• Your neighborhood declined

• Your property has issues affecting value

→ Check if you qualify for a reduction

Two identical homes on the same street in Los Angeles:

Home A: Purchased in 1990 for $200,000

• Current assessed value (after 2% annual increases): ~$380,000

• Annual property tax: ~$3,800

Home B: Purchased in 2022 for $1,200,000

• Current assessed value: $1,200,000

• Annual property tax: ~$12,000

Same house, same neighborhood—but Home B pays more than 3x the property tax because of when it was purchased.