Assessed Value

Definition

Assessed value is what your local county assessor says your property is worth for tax purposes. It is not the same as market value (what a buyer would pay today) or appraised value (what a lender's appraiser thinks it's worth). In most states, assessed value floats with the market. California is different. Under Proposition 13, your assessed value is set at the purchase price and can only increase by a maximum of 2% per year, regardless of what happens to market prices. This is why two identical homes on the same street can have wildly different assessed values depending on when each was bought.

Why it matters

Your assessed value is the number your property tax bill is based on. If your assessed value is $500,000 and your total effective tax rate is 1.18%, you owe $5,900 per year. Lower assessed value means lower taxes, which is why Prop 13's 2% annual cap is such a big deal for long-term California homeowners. It is also why a change of ownership triggers a reassessment: the county resets your assessed value to the new purchase price, which often means a much higher tax bill for the new buyer. Homeowners can challenge their assessed value by filing an assessment appeal with the county if they believe it exceeds the property's current market value, which sometimes happens after market downturns. You can estimate how assessed value affects your bill with the California Property Tax Calculator.

Quick example

You buy a house in 2024 for $750,000. Your assessed value is $750,000. Under Prop 13, it grows 2% per year. After 10 years, your assessed value is about $914,000, even if the market value of the house is $1.2 million by then. Your taxes are based on the $914,000, not the $1.2 million. If you sell, the new buyer's assessed value resets to whatever they pay.

The bottom line

Knowing what Assessed Value means helps you make better day-to-day money decisions. It makes rates, account options, and tradeoffs easier to compare.