California Real Estate Salesperson Exam Practice - Question 75

Question

Due to Prop 13, the minimum annual property tax rate is:

Selections

A. 1% of full cash value

B. 2% of full cash value

C. 1.5% of lender appraised value

D. 1% of lender appraised value

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Answer: A

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5 Keys Summary

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Explanations

Proposition 13, passed in 1978, established the property tax rate in California. One of its key components set the base property tax rate at 1% of the property's value. This property's value is also referred to as the "full cash value" or "assessed value". While properties can have additional special assessments that increase the overall tax rate, the base minimum rate, as a direct result of Proposition 13, is 1%. The 2% mentioned in some options refers to the maximum annual increase in a property's assessed value, not the tax rate itself.

Concepts Definitions

Proposition 13: A California ballot proposition passed in 1978 that established the base property tax rate at 1% of a property's value and limited annual increases in its assessed value to no more than 2%.

Property Tax: An ad valorem tax, meaning "according to value," assessed on the value of real property by local government agencies.

Full Cash Value (Assessed Value): The value of a property used for tax assessment purposes, generally based on its purchase price or its most recent reassessment.

Special Assessments: Additional property tax levies that can be added to a homeowner's property tax bill for specific local public improvements, such as new roads, parks, or schools (e.g., Mello-Roos taxes). These are separate from and in addition to the base 1% tax rate.