Property Tax: Assessment, Exemptions, and Appeals Foundations
Core Concepts
California property tax rests on Article XIII of the state constitution and the Revenue and Taxation Code. The central rule is Article XIIIA (Proposition 13, 1978): real property is assessed at its full cash value as of the 1975-76 lien date, adjusted annually by an inflation factor capped at 2% (the "trended base year value"). A change in ownership or new construction triggers reassessment at current fair market value, creating a new base year. The lien date is January 1 at 12:01 a.m.; values are set as of that moment. The assessment roll is delivered by July 1, and the tax rate is limited to 1% of assessed value plus voter-approved debt.
Exemptions and Special Programs
Candidates must distinguish the homeowners' exemption ($7,000 assessed value, applied for by February 15), disabled veterans' exemption, and institutional exemptions. Also know Prop 8 (temporary decline-in-value reductions), Prop 58/193 (parent-child and grandparent-grandchild exclusions), and Prop 60/90 (base-year transfers).
Traps
- Confusing change in ownership with a mere change of title (e.g., transfers into a revocable trust generally are not reassessable).
- Assuming the 2% cap applies to the tax bill rather than the assessed value.
- Forgetting that supplemental assessments apply the difference between old and new base-year value prorated by the number of months remaining in the fiscal year.
- Misapplying the February 15 filing deadline for the homeowners' exemption.
Rule of Thumb
If a property sells for $600,000 on July 1 and the prior base-year value was $300,000, the supplemental assessment equals the $300,000 difference multiplied by the applicable rate and prorated for the months left in the fiscal year. Always confirm the lien date and proration period first.
Exam Strategy
Read each stem for the date of transfer and the type of transfer. These two facts usually determine the answer.