FormerSanDiegan, if one buy at a higher price, one can just as easily request for reassessment too. So w/in a year, both houses will be paying the same property tax. So, please tell me, where’s the tax advantage?
AN – Once the supplemental tax credit is computed, the nely purchased home is forever (until sold again) limited to a 2% annual increase in property tax basis.
The home purchased at the peak of the bubble can apply for reassessment at a lower value. However, if/when the price of that home goes back up in the future it can be reassessed up to the original purchase price plus 2% per year. There were several court cases, (I believe they originated in Orange County) circa 2000-2002 in which these reassessments were challenged. But they were found to be allowed under Prop 13.
So, for several years, maybe even a decade or more, there will not be a significant annual property tax advantage to buying later at a cheaper price. However, the earlier buyer at the higher price had to pay signifcantly higher prop tax in the first few years. They will not get that money back, hence the later, cheaper buyer comes out ahead.
