Proposition 13 and Proposition 8

Two voter-approved measures, passed four months apart in 1978, define how California property is valued. They are usually described as a “2% cap”, which is where most online explanations go wrong: they are not one limit, and the 2% does not apply to what you are probably comparing it with.

Proposition 13: the base year value and the 2% factor

Proposition 13 added Article XIII A to the California Constitution. The Board of Equalization summarizes three effects:

• Rollback: most local real property assessments were rolled back to 1975 market value levels.
• Rate limit: the property tax rate is limited to 1% plus the rate needed to fund local voter-approved bonded indebtedness.
• Value limit: in most cases, future property tax increases are limited to a maximum of 2% per year.

The figure that carries the 2% is the base year value: the market value established in 1975, or at the property’s most recent change in ownership or completed new construction. Once a year that base year value is adjusted by the lower of the change in the California Consumer Price Index or 2%. The adjusted result has a name of its own — the factored base year value — and it is the ceiling for that property.

Two consequences follow, and both matter more than the percentage:

• The limit is measured from an event, not from last year. A property bought in 2021 has a base year value from 2021; the limit applies to that figure. Comparing this year’s assessment with last year’s answers a different question.
• The limit resets on transfer or new construction. A change in ownership or completed new construction establishes a new base year value at market value, which is why a recently purchased home can be assessed far above an identical neighboring one. That is the system working as designed, not an error.

Proposition 8: the decline-in-value rule

Proposition 8 was passed later in 1978 and codified at § 51(a)(2) of the Revenue and Taxation Code. Its rule is short: if the property’s market value on the January 1 lien date is less than its adjusted base year value, the assessor enrols the lesser of the two.

Three details of Proposition 8 are routinely misstated, and they are the ones that matter when you are deciding whether to appeal:

1. The reduction is temporary. The assessor reviews the assessment every year to decide whether the property should stay in decline-in-value status.
2. An assessed value in decline-in-value status may rise by more than 2% in a year. The BOE states this explicitly. The protection is not “no more than 2% each year”; it is that the assessed value can never exceed the property’s existing factored base year value absent a change in ownership or new construction.
3. You do not benefit unless the market value falls below the ceiling. A home whose value falls but stays above its factored base year value keeps the same assessment.

Worked example (illustrative)

Illustrative numbers only. Neither the CPI factor nor your market value is published by this site.

1. Ceiling: base year value $500,000, adjusted at 2% a year for six years — factored base year value ≈ $563,000.
2. Decline: January 1 market value $520,000, which is below the ceiling, so the assessor enrols $520,000.
3. Recovery: the next year market value rises to $560,000. The assessment is no longer limited by the decline-in-value figure — it returns to the ceiling (≈ $574,000 after another annual factor). Last year’s $520,000 becomes $574,000: about 10% in one year, with no rule broken.

What this tells you: in California, the question to ask is not “did my value jump more than 2%?” but “is my assessment above the lesser of my factored base year value or the property’s market value on January 1?”

What it does not tell you: your own factored base year value, the CPI factor used for your year, or whether the change in ownership record that set your base year value is correct. Those come from your county assessor’s records.

Why this site does not screen California values yet

The assessment checker published here compares last year’s figure with this year’s figure and flags a change that exceeds a state’s statutory cap. That comparison is valid in Texas (10% over the prior year) and in Florida (Save Our Homes, 3% or CPI, over the prior year). It is not valid in California, because the lawful ceiling here is the factored base year value — a figure that has nothing to do with last year’s assessment. Running a California property through that screen would produce a confident answer to the wrong question, so the tool is not offered for California. A California-specific screen would need your factored base year value and the applicable CPI factor, and is a later phase.

Where to go next

• The notice of assessed value — when the assessor must (and need not) send one.
• The application for changed assessment — the only route to challenge the value.
• How each state limits assessment increases — Texas, Florida and California side by side.