Decline in Value – Proposition 8


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.

The market value of real property may decline from one lien date to the next lien date; however, the property will not benefit from a lower assessment unless its market value falls below the current factored base year value.

For example, if you purchase your property during a time when the real estate market falls dramatically, or if your property is substantially damaged due to a storm or fire that causes a reduction in your property's value, it is likely that your property will benefit from a Proposition 8 reassessment. The decline in value is typically temporary and may be the result of changes in the real estate market, the neighborhood, or the property itself.

When the market value of a property on the January 1 lien date falls below the factored base year value, the assessor will review the property's assessment and enroll the lesser of the factored base year value or market value.

Once a property's assessment has been reduced under Proposition 8, the assessor reviews the assessment annually to determine whether it should remain in decline-in-value status. The assessed value of a property in decline-in-value status may increase each lien date (January 1) by more than the standard two percent maximum allowed for properties assessed under Proposition 13; however, unless there is a change in ownership or new construction, a property's assessed value can never increase above its existing factored base year value.

How it Works

Revenue and Taxation Code section 51, requires an assessor to annually enroll the lesser of a property's Proposition 13 factored base year value or its market value as of January 1st.

An assessor's office continually monitors real estate market conditions and reviews and adjusts assessed values as necessary to ensure properties are assessed correctly.

Most county assessors will review a property's assessment for a possible decline in value upon request. The review may be provided as an informal discussion with assessor's staff, or the assessor may require the property owner complete a request form. Contact your local assessor to determine the requirements for a decline-in-value review in your county.

The typical review process may be as follows:

  1. Complete the assessor's request form or contact the assessor by phone.
    • Provide the assessor information that supports your opinion of market value for the property. This is typically sales of comparable properties that sold close to January 1 but no later than March 31.
  2. Submit the request form and/or information requested by the deadline.
  3. An appraiser from the assessor's office will review the information submitted and perform a market value analysis of your property as of January 1.
  4. The assessor's office will determine whether the current market value of the property is lower than its current factored base year value. The lower value is enrolled.
  5. After the review is complete, the property owner is notified of the assessed value.

If you disagree with the assessed value after the review has been completed, you may file an assessment appeal application with the county clerk. For information on how to obtain and complete an application visit your local clerk of the board website. The appeal application must be filed during the county assessment filing period.


The following resources provide information on guidance on Proposition 8 (Decline in Value).

LTAs provide an ongoing advisory service for county assessors and others interested in the property tax system in California. The letters present Board staff's interpretation of rules, laws, and court decisions on property tax assessment. The following LTAs pertain to assessment or procedural issues involving declines in value in California.

Letters To Assessors (LTAs)
Title Letter to Assessor
Annual Increases in Value 2004/060
Errors in Assessed Values 2009/038
First Lien Date 86/36
Floating  Homes 2011/051
Fractional Interests 86/04
Informal Assessment Review 96/52
Machinery and Equipment 79/59, 79/143
Manufactured Homes 2011/051
New Construction Exclusion 2009/024
Notice 93/71
Proposition 8 80/129, 81/19, 82/25, 92/24, 92/63, 93/71, 96/52, 2004/060, 2011/051
Questions and Answers 79/39
Roll Corrections 95/54, 2009/038

The BOE is mandated to prescribe rules and regulations to govern local boards of equalization when equalizing and county assessors when assessing in compliance with the rulemaking procedures adopted by the California Office of Administrative Law. Pursuant to that mandate, the BOE has adopted various Property Tax Rules which are contained in Title 18 of the California Code of Regulations.

Property Tax Rules
Title Rule
Real Property Value Changes 461
Petroleum Refining Properties 474

Annotated legal opinions are summaries of the conclusions reached in selected legal rulings of California State Board of Equalization counsel. The following legal opinions pertain to questions involving declines in value.

The Assessors' Handbook is a series of manuals developed by the staff of the Board of Equalization in an open process. The objective of the Assessors' Handbook is to give county assessors, their staff, and other interested parties an understanding of the principles of property assessment and real and personal property appraisal for property tax purposes. The Assessors' Handbook is intended to serve as a guide for the appraisal and assessment of real and personal property. Additionally, the Assessors' Handbook presents the Board staff's interpretation of rules, laws, and court decisions on property assessment.


Under Proposition 13, base year values may not be increased more than two percent per year. Properties in decline-in-value status under Proposition 8, however, are not limited to the maximum two percent increase, since such properties are not assessed according to their factored base year values. Instead, where a property remains in decline-in-value status for two or more consecutive years, the year-to-year change in value will reflect the change in market value regardless of the magnitude or direction of the change. In all cases, the factored base year value is restored once the market value increases to the point where it is equal to or greater than the factored base year value.

No. Only the most recent January 1st assessment may be reviewed. Proposition 8 does not allow for relief for prior years and does not apply to supplemental assessments.

Some assessors will mail a notice. Others will mail a corrected tax bill. Please check with your county assessor's office for their procedures. However, if you haven't heard from your assessor by the time your county's formal assessment appeals deadline draws near, you may consider filing an assessment appeal application with your county clerk to ensure your property's assessment is reviewed for the year in question.

No. You must pay your property taxes according to the tax bill you received or penalties and interest will incur. If a reduction in assessed value is warranted, a notice of correction and a revised tax bill or refund based on the difference in value will be processed by your county assessor. If you have not been notified of the results of the assessor's review by the time the deadline to file an assessment appeal in your county draws near, you may want to file a formal assessment appeals application to ensure your property's assessment is reviewed.