> when real property is purchased, the county assessor assigns it an assessed value that is equal to its purchase price, or “acquisition value.” Each year there

> when real property is purchased, the county assessor assigns it an assessed value that is equal to its purchase price, or “acquisition value.” Each year thereafter, the property’s assessed value increases by 2 percent or the rate of inflation, whichever is lower. This process continues until the property is sold, at which point the county assessor again assigns it an assessed value equal to its most recent purchase price. [1] If you have owned your home for awhile, your property taxes are not changing that much. Your assessed value starts with the purchase price and increases, at most, 2% each year. This house[2] listed on Zillow is a great example. It sold in 1973 for $32K. For the passed 40 years they've been paying property taxes based on the $32K plus ~2% increase each year (I'm not sure how far back that 2% max increase goes). In 2013, the assessed value was still down at $72K... meaning $997 in property taxes. That same year the house was sold for $875K. Now the assessed value resets to market value and the new property taxes will be like $11k rather than the previous year's $1K. So even though the housing prices skyrocketed around them, the previous owner of the house wasn't really effected by that increase. [1] http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-1... [2] http://www.zillow.com/homedetails/3245-Anza-St-San-Francisco-CA-94121/15095502_zpid/ http://www.zillow.com/homedetails/3245-Anza-St-San-Francisco...