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Q: California Property Taxes Assessed Value ( Answered,   4 Comments )
Subject: California Property Taxes Assessed Value
Category: Business and Money > Accounting
Asked by: fragrantgas-ga
List Price: $25.00
Posted: 08 Oct 2006 23:30 PDT
Expires: 07 Nov 2006 22:30 PST
Question ID: 771886
I've been leasing a home in California for nearly 10 years since 1996.  At the
start of the lease, I purposely included a purchase option of $500,000
at the end of Year 1 or 4%/year increase for up to 10 years.  I'm at
the end of my lease option period and I can purchase this home for
about $712,000 per my agreement.  The landlord/seller had no idea the
house would appreciate so much over this period, but he said he would
honor the agreement.  I believe the house is easily worth a million
dollars or higher.  My understanding is that California's property
taxes are approximately 1.25% of the appraised value.  If it's 1.25%
of $712,000 that's $8,900/year in taxes.  However, if it's 1.25% of
$1MM, that's $12,500/year which is a big difference for me.  Because
I'm buying the house under market, per an enforceable purchase option
that was signed 10 years ago, will I be assessed at my purchase price
or the fair market value of the house?
Subject: Re: California Property Taxes Assessed Value
Answered By: pafalafa-ga on 09 Oct 2006 19:39 PDT

Assessments are generally done at the local level, according to local
rules, so you'll have to check with your county assessor's office for
specifics on your situation.

But in general, homes are assessed on market value, rather than sale price.

There are good reasons for this (from the assessor's point of view, at
least).  One is the obvious reason that home values change, sometimes
very rapidly, and assessors have to be able to gauge market value
independently of actual sales price.

The other reason is that homes sometimes do sell at below-market
prices for a variety of reasons, such as a contractual stipulation
(such as your case) or, say, in the case of a sale of a home to a
close relative/in-law, and cutting them a break on the price.

As an example of how one county in California approaches this topic,
here is a bit of an excerpt from the Sonoma County Assessors Office:
Frequently Asked Questions

Q. I just bought a house. Will I be assessed on the price I paid? 
A. Not necessarily. Real property is valued at its current market
value at the time it changes ownership. In a majority of cases, the
sales price equals market value, but not always...

You can find a very similar statement in other counties, such as on
this Assessments FAQs page for San Joaquin:

Other counties will operate in the same way, no doubt.

If you want to let me know what specific county your house is in, I'll
be happy to check the local assessor's office for additional

Cheers...and enjoy your apparent windfall.

Subject: Re: California Property Taxes Assessed Value
From: myoarin-ga on 09 Oct 2006 02:56 PDT
Just a free comment.

The record for the sale will not show the reason for the price paid,
so I suspect (!) the county assessor might accept that price, since a
higher assessment would be inviting an easily avoidable dispute and
require difficult justification.

Maybe in your town/city the total property tax bill is 1.25%.  In some
places in California, local fire department and other fees are added
to the actual property tax.  At least in one town, these add-ons are
greater than the actual tax.

This website will allow you to look at house price estimates in your
area and also at actual prices for recent sales:

When you have clicked for more information on your residence, you can
click for recent sale prices.

Although you do not need a real estate agent, one could certainly
confirm the actual tax bill percentage and maybe have an idea about
the assessment, and maybe also ways to have the house evaluated in
line with the purchase price.

If you learn that the local assessor is aggressive, maybe getting an
evaluation prior to the sale would make it more difficult for him to
assess a higher value.

Good luck.  I hope someone can provide some hard facts for you.
Subject: Re: California Property Taxes Assessed Value
From: daniel2d-ga on 09 Oct 2006 06:04 PDT
Homes are usually reassessed upon sale.  Houses are assessed on a
regular basis.  The sales price has little to nothing to do with the
assessment -  market value is what matters.  And it is nice of the
landlord to honor the agrement,as if he had any choice.
Subject: Re: California Property Taxes Assessed Value
From: abezon-ga on 09 Oct 2006 16:15 PDT
You're signing up for a $700,000 mortgage & $3,000 extra in taxes per
year is significant??

Call the county assessor & ask if they assess by "arm's length
negotiated" purchase price or by a FMV they determine.
Subject: Re: California Property Taxes Assessed Value
From: myoarin-ga on 09 Oct 2006 18:48 PDT
but a sales price usually defines market value.  The questioner's
situation is an exception, an unusual exception.  It's up to the
assessor to demonstrate that it is not appropriate as a basis for the

as above, it is the assessor's job to decide.  If he thinks he can
justify a higher valuation for the assessment, let him do so of his
own initiative.  It is obviously difficult to demonstrate the
valuation is higher.

I am not suggesting anything devious, just that the questioner/buyer
may be able to defend the sales price as the valuation for assessment,
and perhaps support tht with an appraisor's opinion.


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