Property Tax Doubled at Purchase

[Tim Shi]

Hi there, I am looking at a Duplex in San Francisco. The current owner pays about $500/mo on property tax. The property was sold in 1999 for less than half a million. The assessed value of the property doesn't seem to go up that much despite the rapid increase in fair market value. 

The house is now valued at 1.5 million. Based on the current tax rate of 1.18% in San Francisco, the new property tax would be $1475 / mo.

Is my calculation correct? Basically there will be a 1k jump in property tax at sale.

[Lynnette E.]

yes, this is correct.  You need to research prop 13 for California.  It holds down the assessment in value of property to 2% a year.  So if the value of the property goes up say 10%, the assessment used to determine property taxes can only go up 2% for that year.  Eventually on properties held by the same owner for decades, the real value and the assessment are very different.

For your property, the assessment is about 1/3 the real value, so the taxes will be about 3 times more when it is sold than it is now.

This is unique to property in CA.