Factored base year value is the base year value adjusted for annual inflation (capped at 2% per Prop 13). The current assessed value of a property that hasn't triggered reassessment.
Each year, the county assessor "factors" the base year value by the lesser of 2% or actual CPI. This factored value becomes the assessed value for property tax purposes. The factor compounds, so long-held properties have factored values that compound 2% yearly from their base year.
For LA multifamily sellers, understanding factored base year value clarifies the Prop 13 protection value. A building with a 1985 base year of $500,000 has a 2026 factored value of approximately $1.1 million (41 years of 2% compounding) — even if market value is $6 million. Property tax is computed on the factored value, not market.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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