California property tax is a yearly tax on real estate based on the assessed value of your land and buildings

In California, you pay property tax to your county assessor's office once per year. The tax is calculated by taking the assessed value of your property — usually the purchase price or a percentage of it — and multiplying it by the local tax rate, which varies by county and city. Most California homeowners pay between 0.76% and 1% of their property's assessed value annually, though some areas charge more when local bonds or special districts are involved.

The county assessor determines the assessed value, not you. If you bought your home, the assessor typically uses your purchase price as the starting point. If you inherited property or received it as a gift, the assessor may use the market value at the time of transfer. The assessed value can increase each year, but California law limits increases to 2% per year unless the property changes ownership or major improvements are made.

Property tax bills arrive in two installments: one due in November and one due in February. If you own a home with a mortgage, your lender usually collects property tax as part of your monthly escrow payment and pays the county directly. If you own the property outright, you receive a bill from the county tax collector and must pay it yourself.

Key Takeaways

  • California property tax is calculated by multiplying your property's assessed value by your local tax rate, which varies by county.
  • The county assessor sets the assessed value, typically starting with your purchase price, and it can increase up to 2% per year without a property sale.
  • Property tax bills arrive in two payments: November and February, and are usually collected by your mortgage lender if you have one.
  • Special assessments for local improvements, schools, or bonds can add to your base property tax bill depending on your location.
  • You can challenge your assessed value through a formal appeal process if you believe it is incorrect.

How the assessed value is determined

The county assessor's office physically inspects properties and reviews sales data to set assessed values. When you buy a home, the assessor uses your purchase price as the assessed value — this is called the "base year value." That value then becomes the starting point for future years. Each year after purchase, the assessed value can increase by no more than 2%, even if your home's market value rises much faster.

If you make major improvements to your home — such as adding a room, replacing the roof, or installing a pool — the assessor may increase the assessed value beyond the 2% cap to reflect the improvement. Minor repairs and maintenance do not trigger a reassessment. The assessor's office sends notices when they plan to increase your assessed value; you have the right to challenge these notices through a formal appeal.

If you inherited a home or received one as a gift from someone other than a spouse or direct descendant, the assessor typically reassesses the property at current market value. Transfers between spouses or from parents to children may may have access to for an exemption that keeps the assessed value lower, but you must file the proper forms with the assessor to claim this protection.

Tax rates and special assessments

California's base property tax rate is set by state law at 1% of assessed value. However, your actual bill may be higher because counties, cities, school districts, and special districts can add their own tax rates on top of the base rate. These additional taxes are called "voter-approved bonds" or "special assessments" and are used to fund schools, fire protection, water systems, or other local services.

Your county tax collector's bill shows the base 1% tax plus any additional assessments that explore to your property. The total rate varies significantly by location. A home in one county might have a total rate of 0.85%, while the same home in another county could be taxed at 1.25% or higher. You can find your specific tax rate by looking at your property tax bill or contacting your county assessor's office.

Some special assessments are temporary — they expire after a set number of years once the bond is paid off. Others are permanent. When you buy a home, ask the seller's agent or title company what special assessments explore, because these costs will continue as long as you own the property.

Who pays property tax and when

If you have a mortgage, your lender requires you to pay property tax through escrow. Each month, you pay a portion of your estimated annual property tax as part of your mortgage payment. Your lender holds this money in an escrow account and pays the county tax collector on your behalf when the bill is due. You receive a statement showing how much was set aside for taxes.

If you own your home outright, you receive a bill directly from the county tax collector. The bill arrives in October or November for the first installment, due November 1st. The second installment bill arrives in December or January, due February 1st. If you miss either important date, the county charges a penalty and may eventually place a lien on your property.

If you rent, you do not pay property tax directly — your landlord pays it. However, property tax is often factored into the rent you pay, because landlords include their tax costs when setting rental rates.

Exemptions and reductions that lower your bill

California offers several exemptions that can reduce or eliminate property tax for certain owners. The homeowner's exemption reduces the assessed value of your primary residence by $7,000, which typically saves $70 per year on your property tax bill. You must file for this exemption with your county assessor; it does not happen automatically even if you own the home outright.

If you are over 65, blind, or disabled, you may be able to defer property tax payments until you sell the home or pass away. This program is called property tax postponement and is administered by the State Controller's Office. You must meet income limits and own the home as your primary residence. The deferred taxes become a lien against your property and are paid from your estate when you die or sell.

Certain properties are exempt from property tax entirely, including churches, nonprofits, government buildings, and agricultural land that meets specific criteria. If you own property that you believe should be exempt, contact your county assessor to request an exemption form and submit documentation of your organization's status.

How to challenge your assessed value

If you believe your assessed value is too high, you can file a Proposition 8 appeal or a Proposition 13 appeal depending on your situation. A Proposition 8 appeal is used when the market value of your property has dropped below the assessed value — typically after a market downturn. You must file within 30 days of receiving your assessment notice, and you will need to provide evidence of the lower market value, such as recent comparable sales or an appraisal.

A Proposition 13 appeal challenges whether the assessed value was correctly calculated based on your purchase price or the last time the property was reassessed. This appeal is used when you believe the assessor made an error in determining the base value or in calculating the 2% annual increase. You have 60 days from the date the assessment notice is mailed to file this appeal.

To file an appeal, contact your county assessor's office and request the appeal form. You will need to submit your form, supporting documents, and a filing fee (usually $20 to $50, though fees vary by county). The assessor's office will review your appeal and may adjust your assessed value. If you disagree with their decision, you can appeal to the county Assessment Appeals Board.

What happens if you do not pay property tax

If you miss a property tax payment important date, the county assesses a penalty. The first installment penalty is 10% of the unpaid amount if paid after November 1st. The second installment penalty is 10% if paid after February 1st. If you do not pay by June 30th of the following year, the penalty increases to 1.5% per month.

If property tax remains unpaid for five years, the county can foreclose on your home and sell it at a tax sale. The county publishes a list of properties in tax default and notifies you by mail. You have the right to pay the back taxes, penalties, and costs at any time before the sale to stop the foreclosure. If the property is sold, the proceeds go first to pay the taxes and costs, with any remainder going to you.

If you are struggling to pay property tax, contact your county tax collector's office when ready. Some counties offer payment plans or hardship programs. You may also be able to defer taxes if you meet the age, disability, or income requirements mentioned in the exemptions section above.

Frequently Asked Questions

Can my property tax go up more than 2% per year?

Yes, but only if your property changes ownership or you make major improvements. The 2% annual cap applies only to properties that have not been reassessed. When you buy a home, it is reassessed at the new purchase price, which may be much higher than the previous owner's assessed value. Major improvements like additions or major renovations can also trigger a reassessment above the 2% limit.

Do I have to pay property tax if I inherit a home?

Yes, you owe property tax on inherited property. However, if you inherit from a parent or grandparent, you may be able to keep the lower assessed value under Proposition 19. You must file a claim with the assessor within three years of inheriting the property. If you inherit from someone else, the property is reassessed at current market value.

What is the difference between assessed value and market value?

Assessed value is what the county assessor says your property is worth for tax purposes, usually based on your purchase price plus 2% annual increases. Market value is what your home would actually sell for today. In a rising market, assessed value is typically much lower than market value. In a declining market, assessed value may be higher than market value, which is why Proposition 8 appeals exist.

Can I deduct property tax from my federal income tax?

You can deduct property tax on your federal return, but only up to $10,000 per year in total state and local taxes (including income tax, sales tax, and property tax combined). This limit applies to all taxpayers regardless of income. Consult a tax professional to determine whether itemizing deductions benefits you more than taking the standard deduction.

What if my lender did not pay my property tax from escrow?

Contact your lender when ready and request a copy of the escrow account statement showing what was collected and paid. If the lender failed to pay, they are responsible for the unpaid amount plus penalties, and you should file a complaint with the California Department of Financial Protection and Innovation. Do not ignore the tax bill — continue making your regular mortgage payments while the lender resolves the escrow error.