What is Prop 13?


Hi, my name is Carmen Chu, San Francisco’s elected Assessor. One of our office’s core responsibilities is to value all properties in San Francisco, which in turn generates property tax revenue. In our 7 mile by 7 mile City, we have over 210,000 properties and close to 90% of them are residential, like the homes you and I live in. So, you might ask, how can we possibly value all these properties? Well, to better understand our work, we need to explain the state’s Proposition 13 law. In 1978, California voters passed Proposition 13. Under Prop 13, we value your property at market value when your first buy it. Every year after, that value goes up by the CPI, or the California Consumer Price Index. But if the CPI is more than 2%, Prop 13 caps the increase at 2% We’ll walk through the maximum increases Prop 13 would allow. Let’s take a home with an initial market value of $400,000. In the second year, your assessed value grows by a maximum of 2%, going from $400,000 to $408,000. In Year 3, that $408,000 is again increased by 2% to roughly $416,000. Every year after, the value grows by the maximum rate of 2% and that value is called your Prop 13 value. Keep in mind that as time goes by, your Prop 13 value may not be the same as market value. What do we mean by that? Let’s say that over the last five years, average home prices in San Francisco have gone up by roughly 10% every year. Under Prop 13, even though the market value of your home has gone up by 10% every year, your Prop 13 value is capped at 2% growth creating a difference between your market value and Prop 13 value. Know that the value resets when there is a change in ownership. A change in ownership means that the property has a new owner, maybe through a sale, a gift, an inheritance, or by adding or dropping names on title. At that time, the home will be reassessed to market value. That becomes the new starting point of value for the property. Just like before, the growth continues to be limited at 2% until the next transfer happens. Remember, the new owners are responsible for paying taxes at the new level from the first day that they own it. Value might also be added when construction happens on your property. That would be another instance when growth in your value might exceed 2%. Here we would add the value of the construction on top of your existing Prop 13 value. Every July, we’ll let you know what your assessed value is by sending you a letter called the Notice of Assessed Value. You can use that information to estimate your property taxes early. Please note that a separate office called the Treasurer & Tax Collector’s Office will send you a bill in October and they’re responsible for collections. For more information, please visit our website at sfassessor.org Thank you for watching.

Comments 5

  • Inheritance to children or grandchildren is exempt under Prop 58 & 193…

  • Thank GOD for Prop 13. Older people were losing their homes up until Prop 13…It took 2 BUSINESS MEN to pass Prop 13… The evil politicians did NOTHING to save people’s homes!!!! Property tax is EVIL at any level. As long as there is Property tax…. There is no true PRIVATE property……

  • It's time to ajust prop 13 cap at 6%. That could help for california retirement and education

  • Prop 13 is a scheme of stealing from citizens and giving to large corporations.

  • Fool me once shame on you fool me twice shame on me. California's Prop 13 gave my parents who lived in the same house with us 8 kids a tax break all the way till their deaths. For me? Overpriced housing- deflated wages inability to pay for college and no marriage. If I had bought a house I could not afford it long term – I did the math. The rich buy up all the small ones to force renting and over charge for profit. Hence: many, many homeless. The legislators need to to actually create FAIR TAX rules EQUALLY so that the people who actually WORK for a living can again make money and spend it into the economy like before Prop 13. The reason for the past recession was because it was promoted to have many children after WWII. I have NONE. That is your future unless the greedy landowners share and share alike instead of raising the rent every time you get a pathetic raise or allow us to have small businesses in places we can afford and actually join the rest of the profit makers.

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