Does Proposition 13 still apply?

Proposition 13 does apply today to all property owners in California. Prop 13 was enacted in 1978 to control the amount of property taxes paid by taxpayers. Prior to prop 13 there was no limit on property taxes. The assessed value was based on the market value every year and because the market values increased significantly over time in California, the amount of paid taxes increased significantly. As the values of the homes increased over time, older folks were being driven out of their homes unable to pay the increases. This amendment 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 applies to all who own property in California even those who have purchased recently. What Prop 13 did and still does today is establish a cap on the amount of property taxes the government can charge you. The initial purchase price of your property, as long it was a market transaction, becomes your base value. Generally, most Californians pay about 1.25% of their assessed value in actual property taxes per year. 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, often this is when you initially purchased your property. The assessed value is the value you pay taxes on for a designated year since all base values have a 0-2% per year based on Prop 13. Generally, most Californians pay about 1.25% of their assessed value in actual taxes per year. So as your base value trends every year raising your assessed value year to year, accordingly what you pay in taxes goes up also. Even though your 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 value increases substantially, your tax base won’t increase along with the market it is limited to the 2% trend.