The Prop 13 Math Most Homeowners Never Run

In California, your property taxes don’t automatically go up every year. Increases in property taxes are tied to increases in value… and 2% is the annual maximum increase.

The math

If you purchased a home for $150,000 in 1985, and the assessed value increased the maximum of 2% per year, the tax basis today would be approximately $331,000. If the home is currently valued at $1,500,000, a buyer would be taxed on the full $1,500,000.

At a typical rate of about 1.1%, that difference is worth roughly $13,000 a year in property taxes.

Why it matters when you sell

That savings is part of the cost of moving. When you sell and buy again, your new home is generally assessed at its purchase price, and the low basis you’ve built over the decades goes away.

Prop 19 can help

If you’re 55 or older, Prop 19 lets you transfer your existing tax basis to a replacement home anywhere in California, up to three times. If the replacement home costs more than the one you sell, the difference is added to your basis. There are timing rules, so plan the sale and the purchase together, and talk with your tax professional about your situation.

Thinking about downsizing or moving? Let’s run your numbers. Call me…

Originally published in The Trusted Advisor, October 2026.