Prop 13, Prop 8, Prop 19: California property tax propositions, explained
California property tax runs on a handful of ballot measures, some from 1978. Here is what each one does, in plain English, and what they mean for commercial owners today.
Most states set your property tax from what the property is worth today. California mostly doesn’t. Its system is built on ballot measures, and once you know four of them, the whole thing makes sense.
| Proposition | Year | What it does, in one line |
|---|---|---|
| Prop 13 | 1978 | Taxes property on its purchase price, rising no more than 2% a year |
| Prop 8 | 1978 | If the market drops below that number, you get taxed on the lower value |
| Prop 19 | 2020 | Changed what family members and older homeowners can carry over |
| Prop 15 | 2020 | Would have taxed commercial property at market value. Voters said no. |
Prop 13: the purchase price becomes the anchor
Prop 13 does three things. It limits the general property tax rate to 1% of assessed value, plus voter-approved bonds and assessments. It sets a property’s value at what you paid, called the base year value. And it lets that value rise by no more than 2% a year while you own it.
Two events reset the clock: a change in ownership and new construction. When either happens, the assessor sets a new base year value, and a supplemental tax bill usually follows for the rest of the year.
For commercial owners, “change in ownership” includes more than a deed. If someone gains control of more than half of the entity that owns the property, that can trigger a reassessment too, even though the deed never changes.
Prop 8: when the market drops below your Prop 13 value
Prop 8 is the other half of the deal. If the property’s market value on January 1 is lower than its Prop 13 value, the assessor has to tax the lower number. It’s temporary, and it’s reviewed every year.
This is where most commercial appeals in California come from right now. Here’s what it looks like for an office building bought near the peak:
| Office building bought March 2022 | Value |
|---|---|
| Purchase price (base year value) | $50,000,000 |
| Prop 13 value on January 1, 2026 (up to 2% a year) | $54,100,000 |
| Market value on January 1, 2026 (income approach) | $38,000,000 |
| Reduction owed under Prop 8 | $16,100,000 |
| Tax saved at a 1.2% effective rate | About $193,000 a year |
Illustrative. Real figures depend on the base year, the inflation factors applied, the local tax rate and the evidence of value on January 1.
We cover deadlines and how to file in our Prop 8 guide.
Prop 19: family transfers and moving homeowners
Prop 19 passed in 2020 and took effect in 2021. It made two big changes:
- Owners 55 and older, severely disabled owners and disaster victims can move their low Prop 13 value to a replacement home anywhere in California. Seniors and disabled owners can do it up to three times. If the new home costs more, the difference is added on.
- Parents passing property to children got a much narrower break. The exclusion now covers only the family home, the child has to live there as a primary residence within a year, and only up to about $1 million of extra value is protected. The old exclusion for rentals, land and commercial property is gone.
For commercial and investment property, that last point matters. A family that inherits a building now usually gets a new, higher assessed value, which is exactly the kind of number worth checking.
Prop 15: the split roll that didn’t pass
In 2020, Prop 15 would have taxed most commercial and industrial property at market value while leaving homes under Prop 13. Voters rejected it. Commercial property stays under the same Prop 13 and Prop 8 rules as everyone else, for now.
What this means for owners
- Bought or built between 2018 and 2025? Check whether the market is below your Prop 13 value. That’s a Prop 8 case.
- Restructured your ownership? Make sure a change in control was handled correctly.
- Inherited a building? Check the new base year value against real market evidence.
- Held for decades? You’re probably far below market, and there’s little to appeal.
Levy, our agentic AI, screens every California parcel by base year and compares it with market value on January 1. Reserve Tax Group files the appeals. See how we handle California.
Sources
- Los Angeles County Assessor, Proposition 19 summary fact sheet
- California State Board of Equalization, letter on decline-in-value filing periods
This article is general information, not tax or legal advice. Rules and deadlines change and vary by county. Check with the appraisal district or assessor, or ask us, before you file.
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