Proposition 13 Defined: -
Passed by the voters in June, 1978, Proposition 13 substantially changed the taxation of real property in California. As a result of this Constitutional amendment:
- The maximum amount of property tax cannot exceed 1% of the property's assessed value, plus any bonds or fees approved by the voters.
- Real property can only be reappraised upon a change of ownership or new construction. Business personal property, including boats and airplanes, and certain restricted properties are subject to annual appraisal.
- Except for those two instances, no increase in the assessed value of any real property can exceed 2% annually, regardless of the rate of inflation unless the Assessor has previously granted a temporary reduction due to the market value decline.
How Proposition 13 benefit homeowners:
Whether you bought your home last month or have owned your home for twenty years, if you live in California, Proposition 13 is protecting you.
The first benefit is that even the most recent home-buyer pay 1/3 of the property taxes that they would without Proposition 13. The initiative simply keeps the general level of property taxation lower and fairer. Without Proposition 13, many new buyers could not afford both their mortgage payments and their taxes.
Proposition 13 also gives new homeowners long-term security by providing predictability in taxes. Property taxes are levied once a year. The tax "rate" is applied to the value of your home to determine your tax bill. Proposition 13 help you by limiting the maximum tax rate to 1%. If a home has a value of $250,000, the owner will see a tax bill of $2,500.
But what happens when the value of your property goes up? In other states, if the value of your home doubles, so does your property tax bill. But because of Proposition 13, here in California the taxable value of your home can go up 2% per year. Thanks to Proposition 13, new buyers know exactly what their taxes will be next year, in five years, and in 30 years - reassuring information for those who plan to live in their homes when they retire.
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Contact your County Assessor's Office as well as your Tax Accountant before making any decisions or taking legal action. ( Courtesy of Fidelity National Title.)
Jyoti Sandhun 510 872 8942
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