How Proposition 13 values commercial property.

Property tax is 1% of assessed value plus voter-approved debt. A property's assessed value is reset to market value on a change in ownership; completed new construction adds a market value for the new work only. The value then rises each year by an inflation factor of no more than 2%.[1]

For 2026 to 2027, the Board measured California's CPI change at 3.307%, from August 2024 to August 2025 because no October 2025 index was published, so the 2% limit applied.[2]

A change in ownership or completed new construction produces a prorated supplemental bill, from the first of the month after the event to June 30. An event between January 1 and May 31 brings a second bill as well, for the whole next fiscal year.[3]

Counting written renewal options, these are changes in ownership: creating a lease of 35 years or more, transferring a lease with 35 years or more left, ending a lease whose original term was 35 years or more, and transferring the landlord's interest subject to a lease with less than 35 years left (Revenue and Taxation Code 61(c); Property Tax Rule 462.100).[4]

A change in control or ownership of a legal entity that holds California real property must be reported on form BOE-100-B within 90 days of the change, or of a written request from the Board.[5][6]

Filing late carries a penalty of 10% of the taxes on the new base year value, or of the current year's taxes if no change in ownership occurred (Revenue and Taxation Code 480.1, 480.2 and 482(b)).[7]

Our readingWhether a tenant pays a tax increase after a sale depends on the lease.[8]

For a qualified commercial tenant, taxes passed through are building operating costs under Civil Code 1950.9, with its documentation rules.[9]