Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does property assessments on regular basis (usually annually). These are based on doing comparisons with like houses in your neighborhood and are equal prone to "2 blocks over is way more desirable".
In the short term, it does. Sale prices are a big factor in property appraisals in every state. In Washington, "I just paid X" or "My neighbor just paid X" is pretty much the only way you can successfully appeal a state appraisal.
Difference without a meaningful distinction. Houses are bought on credit, that credit isn’t approved without an appraisal that supports the price being paid, and that appraisal is done using comps similar to a tax assessment.
Mine does that too, but the process is clearly flawed because you can't buy land for the assessed price, and you can't build a structure on that land for the assessed value.
It works because they just need to come up with a total value and how it divides between land and house doesn’t matter much. My property taxes also separate out land and it puts the land at like 25% of the total value, but in reality someone would easily pay >50% for my land just to demolish the house and rebuild.
These end up with wildly differing figures. Somehow my purchase price is $772k, my insured price is $225k, my property tax valuation is $302k, and the market price now is either $800k or $1200k, depending on if you're asking to sell it or use it as collateral! Nobody agrees on what property is worth.
Sidenote... you're almost certainly under-insured, especially if you're in California. If a fire sweeps through, you won't be able to rebuild much with $225k. Might want to check that out.
Insured price is based on the structure, not the land. If your house burns down, that's the part they need to spend money replacing. Valuing a structure's replacement cost is (fairly) straightforward based on materials, current labor costs, etc.
This happens in California to. When you buy the state still decides the value of the land (else people would do under the table cash deals like they do with cars).
Usually the assessment and sale price are not far off.
The property assessors are either elected or appointed by elected officials. I have yet to see a single property where the tax assessment is remotely close to the asking price. Can you give some zillow/redfin links?
