Prop 13 (1978) caps California property tax at 1% of assessed value with max 2% annual increases — resetting to market value only when the property sells. Prop 19 (2021) limits parent-to-child property tax transfers: inherited properties only keep the low base if the child uses it as a primary residence, with a $1 million cap above assessed value.
At a glance
Key Facts
Prop 13 (1978): The 1% Cap and 2% Annual Limit
Proposition 13, passed in June 1978, fundamentally restructured California property taxes. Key provisions: (1) Maximum property tax rate of 1% of assessed value for all California real property. (2) Assessed value is set at the purchase price (market value at acquisition). (3) Annual increases in assessed value are capped at 2% or the rate of inflation, whichever is lower — regardless of actual market value increases. (4) Assessed value resets to current market value only when there is a "change of ownership." Result: a homeowner who bought in 1995 for $200,000 might pay property tax on an assessed value of approximately $320,000 in 2026 (after 30 years of 2% annual increases) — even if the market value is $1,200,000.
The Change of Ownership Trigger
Under Prop 13, assessed value only resets when a "change of ownership" occurs. A sale to an unrelated buyer is the most common trigger. NOT triggers: adding a spouse to the title, transfers between registered domestic partners, certain transfers into trusts, and refinancing. Prop 13 creates massive tax advantages for long-term owners. A 1995 purchaser paying tax on $320,000 assessed value owes approximately $3,200/year (1% × $320,000). A 2024 buyer of the same home at $1,200,000 market value owes approximately $12,000/year — nearly 4 times as much. Both owners pay the same 1% rate, on very different assessed values.
Proposition 19, effective February 16, 2021, significantly changed the rules for property transfers from parents to children. Before Prop 19, children who inherited California property could keep the parent's low assessed value without any restriction — even for rental properties or vacation homes. After Prop 19: inherited property only retains the parent's assessed value if (1) the child uses it as their primary residence, AND (2) the fair market value does not exceed the parent's assessed value plus $1,000,000. If either condition is not met, the property is reassessed to market value at the time of transfer.
Prop 19: Portability for Older Homeowners
Prop 19 also created a portability benefit for homeowners aged 55+, severely disabled homeowners, and wildfire/disaster victims: they can transfer their current home's assessed value base to a replacement home anywhere in California, up to three times in a lifetime. Before Prop 19, this portability was limited to moves within the same county or to a small number of participating counties. Now, a Santa Barbara homeowner aged 55+ selling their long-held home and buying a smaller home in San Diego can bring their low assessed value with them, capping out their property tax on the new home.
What California Homeowners Pay in 2026
The statewide average effective property tax rate in California is approximately 0.71% (Tax Foundation data), well below the 1% Prop 13 cap, because long-term owners have benefited from decades of 2%-capped assessed value growth while market values soared. New buyers in 2024-2026 pay close to the full 1% on current market values, while neighbors who bought 20+ years ago pay a fraction on much lower assessed values. This creates dramatically different tax burdens on identical properties based solely on when they were purchased.
Introduction
California's Property Tax System: Shaped by Two Landmark Propositions
California's property tax system is unlike any other state in the nation, shaped decisively by two ballot measures: Proposition 13 (1978) and Proposition 19 (2020, effective 2021). Together, they create a system where long-term owners pay dramatically less in property tax than new buyers on comparable properties — and where the rules for passing property to the next generation changed significantly starting February 2021. This guide explains how both propositions work, what they mean for your property tax bill in 2026, and how the system interacts with the statewide 1% rate.
When you purchase a California property, the county assessor sets the base assessed value at the purchase price. This becomes your "factored base year value." Each year, the assessor can increase this base by a maximum of 2% or the California Consumer Price Index (CPI), whichever is lower. In years when CPI is below 2%, the increase is even smaller. In years of high inflation, the cap protects owners from large assessed value jumps — but even after inflation moderation in 2024-2025, the cap continues at 2% or CPI.
The Reassessment Trigger
Assessed value resets to market value when a "change of ownership" occurs. The most common triggers: sale to an unrelated buyer (full reassessment to sale price); transfer of more than 50% interest to new owners (varies by ownership type). Not triggers under Prop 13 alone: interspousal transfers, refinancing, adding a co-owner who is a spouse or registered domestic partner, transfers into revocable living trusts (with caveats). Partial ownership transfers (selling 50% or less to a non-spouse) may trigger partial reassessment.
Supplemental Assessments
When a property is reassessed due to a change of ownership, the county issues a supplemental assessment for the period between the acquisition date and the next regular assessment cycle. This supplemental bill covers the difference between the previous assessed value and the new market value for the partial year. New buyers should expect a supplemental property tax bill within 6-18 months of closing — often for a significant amount if the property appreciated substantially from the previous owner's assessed value.
Section 02
Prop 19 Parent-to-Child Transfer Rules
Prop 19 significantly narrowed the tax break available to children inheriting California property.
Before Prop 19 (Pre-February 2021)
Parents could transfer any California real property to their children (or grandchildren under certain conditions) without triggering a reassessment — regardless of how the child used the property. A parent with a Venice Beach rental property worth $2,000,000 but assessed at $200,000 could transfer it to a child who then rented it out, with no reassessment. The child would pay property tax on $200,000 assessed value (approximately $2,000/year) instead of the market value rate (approximately $20,000/year). This provision had no dollar cap.
After Prop 19 (Post-February 16, 2021)
To avoid reassessment on a parent-to-child transfer under Prop 19: (1) The child must use the property as their primary residence — rental properties, vacation homes, and unused inherited properties are reassessed. (2) The fair market value at transfer must not exceed the parent's assessed value plus $1,000,000. If the market value is more than $1M above the assessed value, the excess above $1M is added to the assessed value. Example: Parent's assessed value = $500,000. Market value at transfer = $2,000,000. Market value exceeds assessed value by $1,500,000. The excess above $1M ($500,000) is added to the assessed value: new assessed value = $1,000,000 (not the full $2,000,000). This is still a significant benefit — but substantially reduced compared to pre-Prop 19 rules.
Portability: The Prop 19 Benefit for Older Homeowners
Prop 19 replaced the old parent-child exclusion with a new portability benefit for sellers aged 55+. You can transfer your current home's assessed value to a replacement home anywhere in California. If the replacement home costs more than the sale price, your assessed value increases by the difference — but only the difference, not full market value. This benefit can be used up to three times in a lifetime. It makes California's housing market more accessible for older residents who want to downsize without losing their Prop 13 protection.
Section 03
Planning Around Prop 13 and Prop 19
Understanding these rules is essential for California property owners planning major transactions.
For Buyers: New Build vs Resale
New buyers face the full 1% rate on the purchase price. A buyer purchasing a $900,000 home in 2026 pays approximately $9,000/year in base property tax (1% × $900,000), plus special assessments and Mello-Roos (community facilities districts) that often add 0.2%-0.5% to the effective rate in newer developments. Buying in an established neighborhood without Mello-Roos keeps the tax lower. The starting assessed value is the purchase price, and it increases by at most 2%/year from there — so buying at a good price locks in a favorable long-term base.
For Owners Planning to Pass Property to Heirs
Given Prop 19's post-2021 rules, careful planning is required for property expected to pass to children. Options to consider: (1) Transfer property while parents are alive — lifetime gifts trigger reassessment but may be preferable if the goal is children using it as a primary residence. (2) Set up a trust structure that qualifies under Prop 19's primary residence requirement. (3) For multi-property families, prioritize which property will be kept in the family (the one most likely to be used as the child's primary residence) vs sold. Consult an estate planning attorney experienced in California property law — Prop 19's rules have significant complexity in practice.
Using the Property Tax Calculator
To estimate your California property tax under Prop 13, use the Property Tax Calculator at /tax-calculator/usa/property-tax-calculator-by-state/. Enter your estimated assessed value (not market value) and California as the state. The calculator uses the effective statewide rate — for long-term owners, the actual effective rate will be lower than the statewide average because the assessed value has been capped at 2% annual growth.
💡
CountryTaxCalc.com is reader-supported. When you use our partner links, we may earn a commission at no cost to you. This helps us provide free tax calculators and comparison tools. Learn more about our affiliate partnerships
Talk to a Real CPA
Taxhub
★ 4.8 verified reviews · 3,758 reviews
Moving between states means a complex multi-state tax return. Taxhub matches you with a real CPA via video call — average cost $325. Rated 4.8★ by 3,700+ clients.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
What does Prop 13 do to California property taxes?
Prop 13 (1978) caps California property tax at 1% of assessed value and limits annual increases in assessed value to 2% or inflation, whichever is lower. Assessed value only resets to market value when the property changes ownership. Long-term owners pay tax on much lower assessed values than new buyers, creating dramatically different tax bills on comparable properties.
Q
What did Prop 19 change about inheriting California property?
Prop 19 (effective February 16, 2021) narrowed the parent-to-child transfer exemption significantly. Before Prop 19, children could inherit any California property without reassessment, regardless of use. After Prop 19, the inherited property must be used as the child's primary residence, and the exemption caps out at $1 million above the parent's assessed value. Properties not used as primary residences are reassessed to market value at transfer.
Q
How much can California property tax increase each year under Prop 13?
A maximum of 2% per year OR the California Consumer Price Index (CPI), whichever is lower. In years when inflation is below 2%, the increase is even smaller. In years of high inflation (like 2022-2023), the 2% cap protects owners from larger increases. The cap applies to the assessed value, not to the tax bill — special assessments, bonds, and Mello-Roos charges on top of the base 1% can increase separately.
Q
Can I take my Prop 13 assessed value to a new California home?
Yes, under Prop 19. If you are 55 or older, severely disabled, or a wildfire/disaster victim, you can transfer your current home's assessed value base to a replacement home anywhere in California. This can be done up to three times in a lifetime. If the replacement home costs more than the sale price, your assessed value increases only by the difference above the sale price — not to the full new market value.
Q
Does selling your California home reset the property tax?
Yes. A sale to an unrelated buyer is the primary "change of ownership" trigger under Prop 13 — the new buyer's assessed value is set at the purchase price. The new owner starts fresh with a new base assessed value that increases by at most 2% per year going forward. This is why similar California homes can have dramatically different property tax bills based solely on when each was purchased.
Disclaimer:For informational purposes only. This is not tax advice or legal advice. California property tax rules are complex — consult a qualified California tax professional or estate planning attorney for your specific situation.