How Much Are Property Taxes on a California Home? (Prop 13 Explained)

How much are property taxes in California? The base property tax rate is 1% of your home's purchase price under Proposition 13, but most homeowners actually pay between 1.1% and 1.3% when local bonds, parcel taxes, and special assessments are included. For a $750,000 home, that translates to roughly $8,250 to $9,750 annually, or $687 to $812 added to your monthly mortgage payment.

As a mortgage professional working with California homebuyers daily, I find that property taxes are one of the most misunderstood aspects of homeownership in our state. The "1% rule" gets repeated often, but the reality is more nuanced—and understanding these nuances can save you thousands of dollars and prevent unwelcome surprises after closing.

In this comprehensive guide, I'll walk you through exactly how California property taxes work, what Prop 13 means for your wallet, and how to accurately budget for your total housing costs.

How Proposition 13 Works: The Foundation of California Property Taxes

Proposition 13, passed by California voters in 1978, fundamentally changed how property taxes are calculated in the Golden State. Before Prop 13, property taxes could fluctuate wildly based on market conditions, sometimes forcing long-time homeowners out of their homes due to unaffordable tax bills.

The Core Principles of Prop 13

Under Proposition 13, three key rules govern your property taxes:

1. Base Rate Cap: The base property tax rate is limited to 1% of the assessed value
2. Purchase Price Basis: Your assessed value is set at the purchase price when you buy the property
3. Annual Increase Limit: The assessed value can only increase by a maximum of 2% per year, regardless of how much the market value rises

This means that when you purchase a California home, your property is fully reassessed at the current market value (your purchase price), which becomes your new tax baseline.

What This Means for Your Tax Bill

Let's say you purchase a home for $800,000 in 2026. Under Prop 13:

• Year 1 assessed value: $800,000
• Year 1 base tax (1%): $8,000
• Year 2 assessed value (with maximum 2% increase): $816,000
• Year 2 base tax: $8,160

Even if your home's market value jumps to $900,000 in year two, you only pay tax on $816,000. This protection compounds over time, creating significant savings for long-term homeowners.

New Buyers vs. Long-Term Owners: The Property Tax Gap

One of the most striking features of California's property tax system is the disparity between what new buyers pay versus long-term owners.

Consider this real-world scenario on a typical California street:

All three homes might have the same current market value of $900,000, but their tax bills differ dramatically. This is the "lock-in effect" that economists often discuss when analyzing California's housing market—it creates a financial incentive for long-term owners to stay in their homes rather than sell and face reassessment at a new property.

For new buyers, understanding this dynamic is crucial. You'll be paying taxes based on today's prices, not historical values. This should factor into your home-buying budget, especially when comparing costs to states without Prop 13-style protections.

Beyond the 1%: Additional Assessments That Increase Your Tax Bill

While Prop 13 caps the base rate at 1%, that's rarely your actual tax rate. Most California homeowners pay between 1.1% and 1.35% of their home's assessed value due to additional local assessments.

Mello-Roos (Community Facilities Districts)

Mello-Roos taxes, formally known as Community Facilities District (CFD) taxes, were created by the California Legislature in 1982 to help local governments fund infrastructure and services that property taxes alone couldn't cover after Prop 13's passage.

What Mello-Roos funds:

• Schools and educational facilities
• Roads and infrastructure
• Water and sewer systems
• Parks and recreation areas
• Police and fire services

Key characteristics of Mello-Roos:

• It's a flat parcel tax, not based on your home's value
• Can range from a few hundred to several thousand dollars annually
• Typically lasts 20-40 years until the underlying bonds are paid off
• Common in newer developments and master-planned communities
• Requires two-thirds voter approval to establish

Important warning: Unlike regular property taxes, Mello-Roos districts can begin foreclosure proceedings as early as 150-180 days after a tax payment becomes delinquent, compared to the five-year waiting period for regular property tax delinquency.

School Bonds and Local Measures

Voter-approved school bonds and local ballot measures add to your property tax rate. These typically add 0.1% to 0.3% to your effective tax rate and fund:

• School construction and modernization
• Community college facilities
• Local infrastructure improvements
• Wildfire mitigation measures

Special Assessment Districts

Some properties fall within special assessment districts that fund specific local improvements:

• Lighting and landscape districts
• Flood control zones
• Library districts
• Transit improvement areas

How to Find Your Actual Tax Rate

Before purchasing a home, always research the total effective tax rate for that specific property. You can:

1. Request a property tax statement from the seller or their agent
2. Search your county assessor's website using the property address or APN
3. Ask your real estate agent to provide a Net Sheet that includes accurate property tax estimates

Assessed Value vs. Market Value: Understanding the Difference

One of the most common sources of confusion for California homebuyers is the distinction between assessed value and market value.

Market Value

Market value is what your home would sell for in the current real estate market. It fluctuates based on:

• Local supply and demand
• Interest rates
• Economic conditions
• Neighborhood changes
• Home improvements

Assessed Value

Assessed value is the value used to calculate your property taxes. In California, thanks to Prop 13:

• It starts at your purchase price
• It can only increase by a maximum of 2% annually
• It can decrease if the market value drops below the assessed value (Prop 8 reduction)
• It resets to market value upon change of ownership or new construction

The Growing Gap Over Time

Here's how the gap between market value and assessed value can grow:

This is why long-term California homeowners often pay significantly less in property taxes relative to their home's actual worth.

Property Tax Calculations: Real Examples at Different Price Points

Let me show you what property taxes actually look like for homes at various price points, using a realistic 1.2% effective tax rate (accounting for local assessments).

Starter Home: $550,000

• Annual property tax: $6,600
• Monthly property tax: $550
• Added to monthly mortgage: Significant impact on PITI

Mid-Range Home: $850,000

• Annual property tax: $10,200
• Monthly property tax: $850
• Added to monthly mortgage: Substantial portion of housing cost

Higher-End Home: $1,200,000

• Annual property tax: $14,400
• Monthly property tax: $1,200
• Added to monthly mortgage: Major budget consideration

Premium Home: $1,800,000

• Annual property tax: $21,600
• Monthly property tax: $1,800
• Added to monthly mortgage: Equal to some people's entire rent payment

When you're getting pre-approved for a conventional loan or any mortgage product, your lender will factor these property tax amounts into your debt-to-income ratio. Higher property taxes mean you may qualify for a smaller loan amount.

Supplemental Tax Bills: The First-Year Surprise

Perhaps no aspect of California property taxes catches new homeowners more off guard than supplemental tax bills.

What Are Supplemental Property Taxes?

Supplemental property tax is a one-time "catch-up" tax that covers the difference between what the previous owner was paying and what you'll pay based on your purchase price.

Here's why they exist: Regular property tax bills are based on the assessed value as of January 1st each year. When you buy a home mid-year, the county needs to collect taxes on the increased value from your purchase date through the end of the fiscal year (June 30).

How Supplemental Taxes Are Calculated

Example scenario:

• Previous owner's assessed value: $500,000
• Your purchase price: $750,000
• Difference: $250,000
• Purchase date: October 15, 2026
• Remaining months in fiscal year: 8.5 months

Supplemental tax calculation:

• Additional assessed value: $250,000
• Annual tax on difference (at 1%): $2,500
• Prorated for 8.5 months: ~$1,770

Timing of Supplemental Bills

• Bills typically arrive 4-6 months after your purchase closes
• If you buy between January and May, you may receive two supplemental bills (one for the current fiscal year, one for the next)
• If you buy between June and December, you'll typically receive one supplemental bill

Critical Warning About Supplemental Bills

Your mortgage lender's escrow account does NOT cover supplemental taxes. Unlike your regular annual property tax, which is typically included in your monthly mortgage payment and paid from escrow, supplemental tax bills are your responsibility to pay directly.

Many first-time homebuyers are surprised by a $2,000-$5,000 bill arriving months after they thought they'd budgeted for everything. Plan ahead and set aside funds for this expense.

Property Tax Exemptions: Reducing Your Tax Bill

California offers several property tax exemptions that can reduce your annual tax burden.

Homeowner's Exemption

Amount: $7,000 off your assessed value (saves approximately $70/year)

Eligibility requirements:

• Property must be your principal residence as of January 1
• Must file a one-time claim with your county assessor
• Available to all homeowners regardless of income

While $70 may seem modest, it's free money—file the paperwork. Most counties allow you to apply online or submit a simple form after purchasing your home.

Veterans' Exemption

Amount: $4,000 off assessed value (saves approximately $40/year)

Eligibility requirements:

• Must be a qualified veteran
• Must own and occupy the property
• Cannot be combined with Homeowner's Exemption (choose the more valuable one)

Disabled Veterans' Exemption

This exemption provides significantly more substantial savings for qualifying veterans.

2025 exemption amounts:

• Basic exemption: $175,298 off assessed value
• Low-income exemption: $262,950 off assessed value (if household income is below $78,718)

Eligibility requirements:

• Veteran must be rated 100% disabled due to service-connected injury or disease
• Or compensated at 100% rate due to unemployability
• Property must be principal residence
• Unmarried surviving spouses may also qualify

For a qualifying disabled veteran with a home assessed at $500,000, the basic exemption could reduce their annual property tax by approximately $1,750—a significant savings worth pursuing.

Senior Property Tax Assistance

While California doesn't offer a general senior property tax exemption, seniors may benefit from:

• Property Tax Postponement Program: Allows qualifying seniors to defer property taxes until the home is sold
• Assessment freeze programs: Some counties offer programs that freeze assessments for qualifying low-income seniors

How Property Taxes Affect Your Monthly Mortgage Payment (PITI)

When lenders evaluate your ability to afford a home, they look at PITI: Principal, Interest, Taxes, and Insurance. Property taxes are a crucial component of this calculation.

PITI Breakdown Example

For an $800,000 home with 20% down ($640,000 loan at 6.5% interest, 1.2% property tax rate):

Property taxes represent nearly 16% of this buyer's monthly housing cost. In areas with higher tax rates or Mello-Roos, this percentage can climb even higher.

Impact on Loan Qualification

Lenders typically want your PITI to be no more than 28-31% of your gross monthly income. Higher property taxes reduce the loan amount you can qualify for because they increase your total housing expense.

Example impact:

If a lender caps your PITI at $6,000/month, and property taxes plus insurance account for $1,100 of that, you only have $4,900 available for principal and interest—which directly affects your maximum purchase price.

This is why I always encourage my clients to research property taxes carefully before house hunting. That dream home in a Mello-Roos district might push you over your qualification limits.

Ready to see how property taxes affect your specific situation? Apply for pre-approval and we'll help you calculate your exact numbers.

Proposition 19: What It Means for Inherited Property

Proposition 19, passed by California voters in 2020, significantly changed the rules for inherited property and property tax reassessment.

Before Prop 19 (Proposition 58)

Children could inherit their parents' primary residence AND other properties (up to $1 million in assessed value) without reassessment, regardless of whether they lived in the property.

After Prop 19 (Effective February 16, 2021)

The rules became much more restrictive:

1. Primary residence only: The inherited property must become the child's primary residence within one year
2. Value limitations: If the home's market value exceeds the assessed value plus $1,044,586 (2025 amount), there will be partial reassessment
3. Ongoing occupancy required: The child must continue living in the home to maintain the exclusion
4. No more rental properties: Vacation homes, rental properties, and second homes are now fully reassessed when inherited—no exceptions

This has significant estate planning implications for California families. If you're expecting to inherit property or planning to leave property to your children, consult with an estate planning attorney to understand your options.

Note: There's currently a ballot initiative circulating that seeks to restore some of the pre-Prop 19 benefits for family transfers. We'll cover this in detail in a separate post.

Frequently Asked Questions About California Property Taxes

What is the property tax rate in California?

The base property tax rate in California is 1% of assessed value under Proposition 13. However, most homeowners pay an effective rate of 1.1% to 1.3% when accounting for local bonds, Mello-Roos taxes, and special assessment districts. Some newer developments with significant Mello-Roos obligations can see effective rates of 1.5% or higher.

Can my property taxes go down if home values drop?

Yes. Under Proposition 8, if your property's market value falls below its assessed value, you can request a temporary reduction in assessed value. This happened to many homeowners during the 2008-2012 housing crisis. Once the market recovers, your assessed value will increase (up to 2% per year) until it reaches its Prop 13 base again.

How do I pay my property taxes in California?

Property taxes are typically due in two installments: the first installment (November 1 - December 10) and the second installment (February 1 - April 10). Most homeowners with a mortgage have their property taxes paid through their lender's escrow account as part of their monthly payment. You can also pay directly to your county tax collector.

Are property taxes included in my mortgage payment?

Typically, yes. Most mortgage lenders require an escrow account that collects property taxes and insurance as part of your monthly payment. The lender then pays these bills on your behalf. However, supplemental tax bills are NOT paid from escrow—you must pay those directly.

What happens if I don't pay my property taxes?

Unpaid property taxes become a lien on your property. After five years of delinquency, the county can sell your property at a tax sale to recover unpaid taxes. For Mello-Roos taxes, foreclosure proceedings can begin much sooner—within 150-180 days of delinquency.

How can I find out what the property taxes are on a home I want to buy?

Check your county assessor's website using the property address or Assessor's Parcel Number (APN). You can also ask the seller or their agent for recent property tax bills. Your real estate agent should be able to provide accurate property tax information as part of the buying process.

Planning Your California Home Purchase

Understanding property taxes is essential for accurately budgeting your California home purchase. The 1% base rate is just the starting point—Mello-Roos, local bonds, and special assessments can add significantly to your annual tax bill.

As you prepare to buy, remember these key points:

• Budget for 1.1% to 1.3% of your expected purchase price for property taxes, or research the specific rate for properties you're considering
• Set aside funds for supplemental taxes in your first year of ownership
• Factor property taxes into your qualification when determining your price range
• Claim your exemptions to maximize your savings, especially if you're a veteran

Property taxes are one piece of the homeownership puzzle, but they're an important one. Getting this calculation right helps ensure you can comfortably afford your California home for years to come.

Ready to take the next step? Apply now to get pre-approved and receive a detailed breakdown of your estimated monthly payment, including property taxes for your target purchase price and location.

Last verified: January 2026. Property tax rates and exemption amounts are subject to change. Consult with a tax professional for advice specific to your situation.

Sources consulted for this article:

• California State Board of Equalization, Property Tax Publications
• California State Board of Equalization, Proposition 19 Fact Sheet
• County assessor offices throughout California
• California Department of Veterans Affairs, Property Tax Exemptions