Assessment Begins with "Base Year Value"
State law (Proposition 13) established 1975-1976 as the "base year" for property assessments. This base year value is the starting point that is used to calculate annual assessments in the following years.
Base Year Value Increases or Changes
The base year value is adjusted annually for inflation, with any annual increase limited to not more than 2%. This adjusted value is known as the “factored base year value."
Base year value may also be adjusted in the following situations:
Assessed Value Decreases
Generally, property is to be assessed at the lesser of two values: (1) factored base year value (typically the purchase price adjusted annually for inflation, not to exceed 2% per year) or (2) current market value on January 1. When the market value is the lesser value, the "Decline in Value Assessment Program" (Proposition 8) allows for a temporary reduction in assessed value.
Once a property is enrolled in the Decline in Value Assessment Program, its assessed value is subject to annual review in subsequent years in light of current economic and market factors. For example, the assessed value may be:
Assessed Value Increases Exceeding Two Percent (Restoration)
Some San Mateo County property owners whose properties were in the Decline in Value Assessment Program may see an increase (restoring to factored base year value) in their assessment values by more than two percent (2%).
Note: Although Proposition 13 expressly limits annual increases in a property's "factored base year value" to no more than two percent per year, there is no such limitation on annual increases to a property's assessed value, as long as the factored base year value is not exceeded.