As Prices Rise, So Do Taxes | Blog

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As the housing market improves, many California homeowners will see the downside of the recovery: An INCREASE in their property taxes.

Many homeowners believe their property taxes are limited to increases of no more than 2 percent annually because of Proposition 13, the landmark voter initiative approved in 1978.

However, Proposition 8, a companion ballot measure that passed the same year ( not to be confused with the 2008 ballot measure that banned gay marriage in CA), allows assessors to temporarily reduce property assessments when real estate values go down, and it also allows increases of greater than 2 percent when values go back up.  The 2 percent limit set by Proposition 13 doesn't apply until the property's value reaches the level it would have hit if the real estate market never dropped.

This trend is helping counties financially by allowing them to collect more property taxes, but it is an unpleasant surprise to homeowners, who were happily watching their property values rise!   

This article/info is direct from the California Association of Realtors.