Page 40 - Homeowners Manual - San Luis Obispo County

PROP 8-DECLINE IN VALUE

In June 1978, California voters approved Proposition 13, the landmark property tax limitation initiative that added
Article XIII A to the California Constitution.

Proposition 13:

• Rolled back most local real property assessments to 1975 market value levels;

• Limited the property tax rate to 1 percent plus the rate necessary to fund local voter-approved bonded
indebtedness;

• In most cases, limited future property tax increases to a maximum of 2 percent per year. In November 1978,
California voters passed Proposition 8, which amended Article XIII A to allow temporary reductions in
assessed value in cases where real property suffers a decline in value. Proposition 8 is codified by section
51(a)(2) of the Revenue and Taxation Code.

A decline in value occurs in any year in which the current market value of real property is less than its
adjusted base year value as of the lien date, January 1. A property’s base year value is the market value
of real property as established in 1975 or when the property last changed ownership or underwent new
construction. The base year value is adjusted annually by lower of the percentage change in the consumer
price index (CPI), or 2 percent. The adjusted base year value is also known as the factored base year value.

ACTIVE SOLAR ENERGY EXCLUSION

The property tax incentive for the installation of an active solar energy system is in the form of a new
construction exclusion. It is not an exemption. Therefore, the installation of a qualifying solar energy system will
not result in either an increase or a decrease in the assessment of the existing property.

Generally, when something of value is physically added to real property, the addition is assessed at current
market value and this value is added to the existing base year value of the real property. When an active solar
energy system is installed, it is not assessed, meaning that the existing assessment will not increase.

Some active solar energy properties may be eligible for exclusion from reassessment.

Effective June 20, 2014, the sunset date for the active solar energy system new construction exclusion was
extended through the 2023-24 fiscal year. The statue is now scheduled to sunset on January 1, 2025.

All information provided by https://www.boe.ca.gov/proptaxes/faqs/faqspropindex.htm

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