We frequently get asked about how an assessment will change after an acquisition at a price higher than the assessed value. The answer of course is, it depends. Assessors use sales ratio studies to plan an upcoming assessment, to evaluate an existing assessment, and to identify inequities.

Does purchase price affect tax assessment?

California real property taxes are based on a real property's purchase price. For instance, if you buy a real property in California, the assessed value is equal to the purchase price. The assessed value of the real property can rise with inflation every year, which is the change in the California Consumer Price Index.

Does purchase price affect property value?

While cost and price can affect value, they do not determine value. The sales price of a house might be $150,000, but the value could be significantly higher or lower. For instance, if a new owner finds a serious flaw in the house, such as a faulty foundation, the value of the house could be lower than the price.