What is California Proposition 13 and how does it limit property taxes?

California Proposition 13 (1978) limits annual increases in assessed value to a maximum of 2% per year, regardless of how fast market values rise. When a property sells, it is reassessed at the full purchase price and the 2% cap resets from that new base. A homeowner who bought in 1990 for $200,000 may pay taxes on an assessed value of under $500,000 while the market value is $1,500,000.

How does Florida's Save Our Homes cap work?

Florida's Save Our Homes amendment limits annual increases in assessed value to 3% per year (or the rate of inflation if lower) for homesteaded properties. Combined with the $50,000 homestead exemption, this provides strong tax protection for long-term Florida homeowners. Florida also offers portability — you can transfer your accumulated SOH benefit to a new home within 3 years of selling.

What happens to property taxes when you sell a capped property?

When a property with a capped assessment sells, the new buyer is assessed at the full purchase price (market value). The accumulated cap benefit disappears entirely. In California, a longtime homeowner paying taxes on a $300,000 assessed value may be selling a $1.5 million home — the new buyer's tax bill will be 5 times higher than the seller's current tax. Always calculate your own tax, not the seller's.

What is the Texas homestead property tax cap?

Texas limits annual increases in the appraised value of homesteaded properties to 10% per year (or actual market value if lower). Texas also provides a school district homestead exemption of $100,000 (since 2023). Unlike California's Prop 13, the Texas cap is less restrictive at 10% per year, but still provides meaningful protection in rapidly appreciating markets like Austin and Dallas.

Can I transfer my property tax cap benefit when I move?

Only certain states allow portability. Florida allows transfer of the entire Save Our Homes benefit to a new Florida homestead within 3 years of selling. California allows limited transfer under Prop 19, but only for homeowners age 55 or older, severely disabled, or disaster victims. Texas, Michigan, New York, and most other states do not allow portability — your cap benefit is lost when you sell.

Property Tax Cap Calculator

See how California Prop 13, Florida Save Our Homes, and other state assessment caps limit your property tax increases over time. Calculate annual savings vs uncapped taxes, cumulative savings over your ownership period, and what a sale means for the buyer's tax bill.

State

Purchase / Current Value

Annual Market Growth Rate

Years of Ownership

yrs

Apply homestead exemption ($7,000 for California (Prop 13))

Property Tax After 10 Years of Cap Protection

$9,309/yr

Uncapped tax at year 10: $12,465/yr

Year 1 Tax

$7,623

Year 10 Tax (Capped)

$9,309

Annual Cap Savings

$3,156

Cumulative Cap Savings

$15,693

Market Value at Yr 10

$1,140,226

Assessed Value (Capped)

$853,296

Proposition 13 (1978): Assessment capped at 2% per year for homeowners. Full reassessment at market value upon sale. Base rate 1% of assessed value plus local bonds.

Advanced

State Cap Rules, Homestead Exemptions & Portability

How each state's cap works and what protections apply

Assessment caps limit how fast your taxable value can grow even when market values rise faster. Each state has different rules:

California (Prop 13)

Max 2%/yr

Assessment capped at 2% per year for homeowners. Full reassessment at market value upon sale. Base rate 1% of assessed value plus local bonds.

Florida (Save Our Homes)

Max 3%/yr

Assessed value capped at 3% per year (or CPI if lower) for homesteaded properties. The $50,000 homestead exemption applies on top of cap. File homestead by March 1.

Texas (10% Homestead Cap)

Max 10%/yr

Appraised value of homesteaded property cannot increase more than 10% per year (or market value if lower). School district homestead exemption of $100,000 since 2023. No state income tax.

New York (STAR / School Tax Cap)

Max 2%/yr

New York school district tax levies are capped at 2% or CPI increase annually. STAR (School Tax Relief) provides exemption of approximately $30,000 for basic STAR. Enhanced STAR for seniors 65+.

Michigan (Proposal A / Taxable Value Cap)

Max 5%/yr

Taxable value capped at 5% per year (or CPI). Taxable value is reset to state equalized value (SEV = 50% of market value) upon sale. Michigan has no state homestead exemption but has Principal Residence Exemption (PRE) reducing school operating levy.

All Other States — No Assessment Cap

States without caps (including Illinois, New Jersey, Ohio, Pennsylvania) reassess at or near market value periodically. Taxes rise directly with market values — no limit on annual increases. Homestead exemptions provide some relief but no growth cap.

Pro

Cap Resets on Sale, Inheritance & Strategy

Full reassessment sticker shock, Prop 19 limits, and maximizing cap benefits

When a capped property sells, the new buyer pays taxes based on full market value (purchase price). The accumulated cap benefit is lost. This causes dramatic sticker shock.

Tax Sticker Shock on Sale After 10 Years

+$3,156/yr

What a new buyer would pay vs what you pay now

Your Current Annual Tax

$9,309

New Buyer Annual Tax

$12,465

Property Market Value

$1,140,226

Tax Jump for Buyer

+$3,156/yr

Buyer beware in cap states: When you buy a Prop 13 home in California where the seller has owned for 30 years, you must budget for the full market-value tax immediately. The seller may be paying $10,000 in taxes while your first bill is $12,465 or more. Always calculate your post-purchase tax, not the seller's current tax.

Texas example: In Austin or Dallas, a longtime homeowner may pay $3,500/yr under the 10% cap. A buyer pays market-rate taxes immediately — often $8,000-15,000/yr on the same home. The tax difference frequently factors into offer prices and buyer negotiations.

How to Use This Calculator

Select your State to apply the correct assessment cap percentage and homestead exemption rules. Enter your Purchase / Current Value as the starting assessed value. Then enter an Annual Market Growth Rate to simulate how fast market values rise versus the capped assessed value. Set the Years of Ownership to see cumulative savings.

The calculator shows year-by-year tax under the cap versus what you would pay without a cap, including cumulative savings and what happens to the new buyer's tax upon a sale.

Property Tax Cap Formula

Market Value in Year N = Purchase Price x (1 + Market Growth Rate)^N
Capped Assessed Value in Year N = Purchase Price x (1 + Cap Rate)^N
(Capped value cannot exceed market value)

Taxable Value = Assessed Value - Homestead Exemption
Annual Tax = Taxable Value x Property Tax Rate / 100

Annual Savings = Uncapped Tax - Capped Tax
Cumulative Savings = Sum of all Annual Savings over ownership period

Buyer's Tax on Sale = (Sale Price - Homestead Exemption) x Tax Rate

The gap between market value and capped assessed value widens every year when market growth exceeds the cap rate. This gap represents your cumulative tax savings — and is the tax "sticker shock" that new buyers face when they purchase.

Example: $700,000 Home in California After 10 Years

Prop 13 (2% cap) vs No Cap (5% market growth)

	With Prop 13 Cap	Without Cap
Year 1 Assessed Value	$700,000	$700,000
Year 10 Assessed Value	$854,000 (2%/yr)	$1,140,000 (5%/yr)
Year 10 Annual Tax (1.1%)	$9,394	$12,540
Year 10 Annual Savings	$3,146/yr	Baseline
Cumulative 10-Year Savings	~$14,000	—
New Buyer Tax (at sale)	$12,540/yr	No change

After just 10 years, the California homeowner saves over $3,100 per year compared to a hypothetical uncapped tax. The new buyer pays full market-rate taxes immediately — over $3,000 more per year than the seller's current bill.

Frequently Asked Questions

California's Proposition 13, passed in 1978, limits annual increases in a property's assessed value to 2% per year, regardless of market appreciation. Properties are reassessed at full market value only when they sell or undergo new construction. A homeowner who bought in 1990 for $200,000 may pay taxes on an assessed value under $500,000 while the home's market value is $2 million. This protects long-term homeowners but creates significant disparities between neighbors who bought at different times.

Florida's Save Our Homes (SOH) amendment caps annual increases in assessed value for homesteaded properties at 3% or the rate of inflation (CPI), whichever is lower. Combined with Florida's $50,000 homestead exemption, this provides strong tax protection. Florida also has unique portability: when you sell, you can transfer up to $500,000 of your SOH benefit to a new Florida homestead within 3 years, avoiding a full reassessment on the purchase price.

When a capped property sells, the assessment resets to the purchase price (full market value). The accumulated cap benefit that lowered the seller's taxes disappears entirely. In California, a seller who paid taxes on a $300,000 assessed value (thanks to Prop 13) may sell a $1.5 million home — the buyer's first tax bill will be 5 times the seller's current tax. Always research the actual property tax for YOUR purchase price, not the seller's current bill.

In most states, you apply once and the exemption renews automatically as long as eligibility conditions are met. However, you can lose your exemption if you rent the property, change your primary address, or fail to maintain your primary residence status. In Florida, renting out your homesteaded property — even temporarily — can void the exemption for that year and trigger an assessment uncap. Check with your local property appraiser's office for your state's specific rules.

Yes. Every state has an assessment appeal process. If you believe your assessed value exceeds market value, you can file a petition or petition for review with your county assessor or Value Adjustment Board (Florida). You typically have 25-60 days from receiving your assessment notice. Evidence that supports your appeal includes recent comparable sales, a professional appraisal, or documentation of property condition issues. A successful appeal lowers your assessment and the base from which future cap increases are calculated.