Current California Property Tax Law 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 homeowners. 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 passed to assist seniors on fixed incomes who could not adjust to increasing property taxes. This amendment was initiated by Howard Jarvis was a result of a ballot initiative passed by voters in June of 1978, called People’s Initiative to Limit Property Taxation. Current California Property Tax Law is an amendment to the California Constitution and is still a hot topic today because of its limiting nature and the imbalance it has created in terms of how much each taxpayer pays. Taxpayers who bought thirty years ago dont pay nearly as much in property taxes as those who have acquired homes recently and as a result of this many homeowners feel Current California Property Tax Law is unfair and should be repealed.

Prop 13 applies to all who own property in California even those who have purchased recently. What Prop 13 does even today is establish 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 paid a substantial amount below market value for your home the Assessor will assess you at market value because that is what Prop 13 states your taxable base value should be based on. Your assessment is based on market value as of the re-assessable event which is generally your purchase price of the house 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 Californians 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 Current California Property Tax Law and the Consumer Price Index rates for inflation in a given year.

So your base value is the value your property taxes are based on and then it will increase slightly every year. Generally, most California Taxpayers pay about 1.25% of their assessed value in actual property taxes per year. So as your base value trends every year raising your assessed value year to year, accordingly what you pay in property taxes goes up also. Even though your property taxes do increase some every year it is limited, and is ultimately tied to your base value. So even if the market sky rockets and your property value increases substantially, your property tax base wont increase along with the market it is limited to the 2% trend based on Prop 13.

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.