Are property taxes based on purchase value or on appraised value?

Asked by Dave Osterman, Mountain View, CA Sun Jul 5, 2009

In California, the property tax that you pay is based on the prices of the house that you paid or on the latest assessed value?

For example, if a house currently on sale is appraised for $700,000 and you buy it for $650,000... do you pay taxes on which value?

Once again, thanks to everyone who takes the time to answer my questions!

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Nathan Steig…, Home Buyer, Forestville, NY
Thu Apr 9, 2015
Neither bc taxes are not paid on "appraised values" they are paid on assessments. Look at yout town records and look at the assessment then multiply that by total tax rate, there is your tax amount due.

Ppl always mix up appraisal and assessment, two different things!
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Orion Partne…, Agent, Los Altos, CA
Mon Dec 3, 2012
This is a fantastic question because sometimes homes are over-assessed for taxes, meaning that the fair market value of a home is less.

When you purchase a property, the sales price is the default appraisal value for Assessor purposes. The Santa Clara County Assessor will audit files to ensure that the sale transaction was legitimate (e.g. an "arm's length" transaction (the parties are not related) and that nothing appears to be fraudulent). So long as you have not entered into a fraudulent transaction, you're safe assuming you'll pay taxes based on the sales price.

Lori Orion, Broker Associate
Orion Partners @ DeLeon Realty
650.539.LORI (5674)
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arnonamir, , Cupertino, CA
Sun Dec 2, 2012
If you live in Santa Clara county you need to call the Assessor’s Office. Read here:…
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David Blockh…, Agent, Los Altos, CA
Mon Jul 6, 2009
Dave Osterman,

Purchase price.
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Jasbir Gujral, Mortgage Broker Or Lender, Pleasanton, CA
Sun Jul 5, 2009
Hi Dave,

Property taxes you pay are on assessed value. County will generally charge taxes on purchase price but in rare case can change property taxes as per their appraised value. County has final word but you will get a chance to fight it if they change your taxes. So if you bought foreclosure or short sale property you might pay higher taxes than your purchase price.
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Walter 'Skip'…, Agent, Brea, CA
Sun Jul 5, 2009
The sales price in most cases. That said, if you purchase a distressed property (REO or short sale) the property could be assessed at the fair market value determined by the tax assessor. You would then pay taxes on the assessed value and not the purchase price.
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I purchased in Aug. of 2013 a mix use commercial/residential property in depressed area. The property was on the tax rolls last year at close to $700k. The property was purchased for under $185k after over a year on the market. The commercial portion of the property will be very tough to rent but the residences are occupied. The assessor is asking for a rent-roll and other info to reassess the property higher than $185k sale price. The buildings are old and not in good shape. With the year on the market it seems unfair to assess higher than the purchase price. What do you think?
Flag Sun Dec 15, 2013
Aileen La Bo…, Agent, Los Altos, CA
Sun Jul 5, 2009
When you purchase a property, part of the process of closing escrow requires that property taxes be paid to the end of the current period. The purchaser pays those property taxes at the rate that the seller pays, and then immediately upon change of ownership the property is re-assessed at the purchase price. Within about 3 to 6 months, the County will send out a supplemental statement to the new owners which charges the difference between the taxes that were paid at close of escrow, and the re-calculated amount based on the purchase price.
The new owner of the property is then responsible for taxes going forward at the rate calculated on the purchase price.
If the buyer owns the property for long enough there may be an opportunity for reassessment at a later stage, as has been the case in some areas due to the housing downturn. I have clients who have actually managed to have their property tax liability reduced as a result of re-assessment, but this is on a case-by-case basis and may not apply to all properties.
I hope this is helpful,
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Glen Mitchell, Agent, Half Moon Bay, CA
Sun Jul 5, 2009
purchase price......... Glen
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