In its more than 160 plus year history, few things have remained constant in California. However, since the 1800’s California has taxed all classes of property the same.
Thus, when the iconic Prop 13 passed in 1978, it did not differentiate between different kinds of property. All real property – whether residential or commercial – was bestowed with the benefits of a reasonable one percent tax rate cap and, just as importantly, a two percent limit in the annual increase in taxable value.
In 1978, the predominant fear permeating California was an exploding tax burden that was forcing people out of their homes. The one percent rate cap was important, of course, but a rate cap by itself does nothing to control a property tax bill that is based on the “market value” of one’s home. If market values double – as they frequently do in an overheated real estate market – then property owners remain vulnerable to wild fluctuations when tax time comes around.
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