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Prop 13 applies to all property owners in the state of California. Prop 13 was put into law as part of the California Constitution in 1978 by taxpayers to control the amount of property taxes paid by taxpayers. Before Prop 13 there was no limit to help homeowners on property taxes. The assessed value was based on the varying home values every year and because the market values increased substantially over time in California, the amount of property taxes increased tremendously. As the values of the homes went up over time, older folks on fixed incomes were being driven out of their homes unable to pay the property tax increases.

Prop 13 was enacted to assist those on fixed incomes who could not adjust to increasing property taxes. This amendment initiated by Howard Jarvis came about as a result of a ballot initiative passed by voters in June of 1978, called People’s Initiative to Limit Property Taxation. Prop 13 is an amendment to the California Constitution and is highly controversial because of its limiting nature and the imbalance it has created in terms of how much each taxpayer pays. Property Owners who purchased thirty years ago dont pay nearly as much in property taxes as those who have purchased recently and as a result of this fact many taxpayers feel Prop 13 is unfair and should be rescinded.

Current California Property Tax Law applies to all who own property in California even those who have bought recently. What Current California Property Tax Law does even today is place a limit on the amount of property taxes the state can charge you. The initial amount you paid for your property, as long it was an open market transaction, becomes your base value.

A market transaction is when your purchase price is market value it will be accepted as your taxable base value. If you purchased your house way below market value the Assessor will assess you at market value because that is what California Property Tax Law states your taxable base value is based on. Your assessment is based on market value as of the re-assessable event which is generally your purchase price of the property and if your purchase price was market value the Assessor will accept it as market value. If not, the Assessor will determine a value for you based on comparable sales of your home.

Usually, most California Residents pay close to 1.25% of their assessed value in property taxes per year. For example if your assessed value is $100,000 you would pay about $1,250 per year in property taxes. The difference between your base value and your assessed value is very simple. Your base value is the value established as of the date of a re-assessable event usually when your purchase your home. The assessed value is the amount you pay taxes on for a designated year since all base values in California have a 0-2% increase per year based on Prop 13 and the Consumer Price Index rates for inflation in a given year.

Generally, most Californians pay about 1.25% of their assessed value in actual property taxes per year. So as your base value increases every year raising your property tax value year to year, accordingly what you pay in property taxes increases. Remember the amount you pay is limited based on California Property Tax Law. When the market goes up and your property value increases substantially, your property tax base wont go up along with the market, it is limited to the 2% increase based on State Law.

About the author: Valerie Faltas has specialized in Property Taxes for the past 5 years and has produced a free report that exposes the truth about Prop 13 and Prop 8. Check out our FREE California ebook which explains Prop 13 in more depth with examples! Feel free to contact me with any questions you may have! Get your free report on Prop 8 and Prop 13 now. You have full permission to reprint this article provided this box is kept unchanged.

In the state of California, there are essentially two triggers for re-assessment: change in ownership and construction. A change in ownership occurs when a deed or deeds are filed at the county Recorder’s Office, the Recorder will forward the deeds to the Office of the Assessor for assessment purposes. The Assessorss Office will then evaluate the change in ownership to see if it is assessable. If it isn’tassessable then the process stops there, however if it is an assessable transfer it is forwarded to the appropriate staff to give or review a market value and adjust the base value accordingly. A change in ownership that would not be assessable would need to fall within one of the various exemptions allowed by the State such as a transfer into a revocable trust or an inter-spousal transfer which are all explained in our Inherited Property and Exemptions Guide which is part of the California Little Black Book.

When a change in ownership is exempt, the ONLY way the Office of the Assessor knows this is through forms and/or applications which are recorded along with the deed or later requested by the Assessorss Office to confirm an exempt transfer. So when there is no exemption, the transfer is considered assessable per Prop 13. Which means if you do not apply for the exemption, submit a form or offer accepted documentation for an exemption, the transfer is considered assessable automatically. The Office of the Assessor is a mass assessment organization and unless you tell them what you need preferably through forms and documents they wont know what may or may not apply to your change in ownership.

The other trigger for assessment based on Prop 13 is construction. The Office of the Assessor is told by the city or county building and safety offices. The city or building and safety give the information about issued permits to the Assessors’s Office for property tax purposes. Keep in mind, your city receives some of your property tax dollars so though its primarily a state tax your local municipality benefits from it. The permits are given to the real property appraisers to update the building record and change the base value if warranted based on Prop 13. Normally, it takes the Assessors’s Office a fair amount of time to get to because field work is needed to find out what was done to your house and then a valuation process. If there is a demo, your property taxes will likely be reduced, if there is an addition there is likely going to be an go up. So, if you demo a pool your property taxes will go down and if you add a pool, your property taxes will go up. Construction varies from home to home and it will be reviewed based on the value that was added or taken away. This is clearly explained in the California Little Black Book with examples and scenarios. When was employed by the Assessor I assessed countless homes where various types of construction was done and would be happy to answer any questions you may have pertaining to this!

Similar to new construction there is re-assessment of a property if the use of it has changed. For example if a complex of own-your-owns is converted into condominiums the Office of the Assessor will review and reassess the value of each unit since the use change affects the market value of the community. Normally in California there are two events that trigger re-assessment based on Prop 13: change in ownership or new construction.

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.