Proposition 13

Proposition 13 is a 1978 California constitutional amendment (Article XIII A) that fundamentally changed property taxation in the state. It caps the ad valorem property tax rate at 1% of a property's assessed value, limits annual increases in assessed value to no more than 2% per year regardless of actual market appreciation, and establishes the purchase price as the base year value for assessment purposes. When a property is sold or undergoes a change of ownership, it is reassessed at the current market value, which becomes the new base year value. This creates a situation in HOA communities where long-time owners may pay dramatically lower property taxes than recent buyers of identical units — a disparity that has no effect on HOA assessments but can influence community dynamics and owner expectations. Proposition 13 does not apply to HOA assessments, which are governed by the Davis-Stirling Act and the association's governing documents, not by property tax law. Board members sometimes field questions from owners who confuse the 2% cap on property tax increases with HOA assessment increases — the two are entirely separate. HOA assessments can increase by any amount approved through the proper Davis-Stirling procedures, subject to the 20% annual increase limit that requires a member vote. Reassessment triggers under Proposition 13 include sale, transfer to a non-exempt party, and new construction. Certain transfers — such as parent-to-child transfers under Proposition 19 (which replaced the broader Proposition 58 exemption) — may qualify for reassessment exclusions with limitations.