Proposition 13 Property Taxes
California’s Prop 13 is a state constitutional amendment enacted in 1978. Proposition 13 amends the limits that residential property tax rates can increase or decrease upon yearly assessment. Proposition 13 decreased property taxes by assessing property values at their 1975 value. It also restricted annual increases of assessed value of real property to an inflation factor, not to exceed 2% per year. Additionally California Prop 13 prohibited reassessment of a new real estate property tax base year value except for in cases of either change in ownership, or completion of new construction.
Later California also passed Prop 58 and Prop 193. These two propositions allow for property transfer to occur between a parent and child or grandparent and grandchild. In some cases this also permits the low Proposition 13 tax base to be passed to an heir or member of a trust. Here is some additional information on Proposition 13 found on the Board of Equalization Website:
“This amendment to California’s Constitution was the taxpayers’ collective response to dramatic increases in property taxes and a growing state revenue surplus of nearly $5 billion. Proposition 13 rolled back most local real property, or real estate, assessments to 1975 market value levels, limited the property tax rate to 1 percent plus the rate necessary to fund local voter-approved bonded indebtedness, and limited future property tax increases.
After Proposition 13, county property tax revenues dropped from $10.3 billion in 1977-78 to $5.04 billion in 1978-79.”
The California Board of Equalization report goes on to state “Prior to 1978, real property was appraised cyclically, with no more than a five-year interval between reassessments. Since property values were systematically reviewed and updated, assessed values were usually kept at or near current market value levels. In contrast, under Proposition 13, properties are reassessed to current market value only upon a change in ownership or completion of new construction (called the base year value). ”
If you need any additional information on California Proposition 13 or have any information to share, please send and email or add a comment.