Prop 13 applies today to all property owners in the state of California. Prop 13 was implemented in 1978 by homeowners to control the amount of property taxes paid by taxpayers. Before Current California Property Tax Law there was no limit to help homeowners on property taxes. The assessed value was based on the changing home values every year and because the market values increased significantly over time in California, the amount of property taxes increased substantially. As the values of the real estate 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 State Law and is still a hot topic today because of its limiting nature and the imbalance it has created in terms of how much each homeowner 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as those who have acquired homes recently and as a result of this many homeowners feel Prop 13 is unfair and should be repealed.
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 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 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.
Most California Residents pay close to 1.25% of their assessed value in property taxes per year. A simple example is if your assessed value is $200,000 you would pay about $2,500 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 usually increases each year since all base values in California have a 0-2% increase per year based on Prop 13 and the Consumer Price Index.
Generally, most California Taxpayers 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 State Law. When the market goes up and your market value increases substantially, your property tax base wont go up along with the market, it is limited to the 2% increase 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.
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Check out Valerie Faltas' FREE ebooks and articles lower property taxes, property tax expert, valerie faltas, assessment, assessor, assessment appeal
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