Proposition 13 requires all real property to be assessed at its Fair Market Value. Fair Market Value is the amount of cash the property would bring if sold on the open market under conditions in which neither buyer or seller could take advantage of the other. Both the buyer and the seller know of all of the uses of the property and restrictions on it. The price paid in a transaction is presumed to be the fair market value unless it is established by a preponderance of evidence that the property would not have transferred for that purchase price in an open market transaction.
This value is then referred to as the Base Year Value. The assessed value is the Base Year Value plus no more than 2 percent inflation per year, based on the California Consumer Price Index. This is called the Factored Base Year Value. The assessed value may be reduced by Proposition 8 if the Fair Market Value is lower than the Factored Base Year Value.
You have the right to appeal the value if you do not agree with it.
When is property reassessed?
New ConstructionCopies of all building permits are sent to the Assessor's Office by the cities and county. New buildings, improvements to land, or alterations to existing buildings (such as a room addition) and land that constitute a major rehabilitation or convert the property to a different use require a reappraisal. If the construction is a replacement (such as a new roof), an appraisal may not be required. Construction in progress is also assessable.
Change of OwnershipWhen a transfer is filed with the Recorder's Office, the Assessor determines whether a reappraisal is necessary. If it is required, an appraisal is made to determine the new Fair Market Value of the property. The owner is then notified of the new assessment. Some transfers may be excluded from reassessment.