Buying a home in San Diego is an investment in one of the most beautiful places on earth. However, for many first-time buyers or those relocating to California, the property tax system can feel like a maze. The good news? California’s tax system is actually designed to offer homeowners significant long-term stability thanks to Proposition 13.
Here is the 2026 breakdown of how it works in San Diego County.
1. Understanding the 1% Rule
In California, the general property tax rate is capped at 1% of the property’s assessed value. However, your actual tax bill will likely be slightly higher (usually between 1.1% and 1.25%) because of voter-approved bonds for local schools, parks, and infrastructure specific to your neighborhood.
2. The Magic of Proposition 13
The most important thing to understand is that your taxes won't fluctuate wildly with the real estate market. Under Prop 13, the assessed value of your home cannot increase by more than 2% per year.
Even if your home’s market value doubles in five years, your tax bill will remain steady, increasing only by that small, predictable margin. This allows San Diego families to budget for the long term without fear of being "taxed out" of their homes.
3. Reassessment Upon Purchase
When you buy a home, the "tax clock" resets. The County Assessor will typically set the new assessed value at your purchase price. This becomes your new base year value, and the 2% annual cap will apply to this amount moving forward.
4. The Supplemental Tax Bill
One common surprise for new homeowners is the Supplemental Tax Bill. Because the county takes time to update its records, your initial tax bill might still reflect the previous owner’s (likely lower) rate. The supplemental bill covers the gap between what was paid and what you owe based on your new purchase price. It is usually a one-time payment issued shortly after closing.
5. How to Save: The Homeowner’s Exemption
If you live in the home as your principal residence, you are eligible for the Homeowners’ Property Tax Exemption. This reduces the assessed value of your home by $7,000, saving you about $70 to $80 annually. While modest, it’s an easy win that every San Diego homeowner should claim.
Final Thoughts
While the numbers might seem complex at first glance, San Diego’s property tax system is one of the most stable in the country for homeowners. At Key Connections Real Estate, we make it our mission to ensure you are informed, protected, and confident at every step of your journey.
Planning a move in 2026? Let’s sit down and look at the specifics for your favorite neighborhood. Contact us today!
