Do you owe taxes on the sale price or the appraised value?

[David Bittorf]

It seems to me like your taxes are based on your purchase price. For example, let’s say you live in area where taxes are 1.2%. If you buy a property for $500,000 are you locked in at 1.2% based on a $500,000 purchase? Let’s say in 30 years you had the property paid off and sold it to your son for $3,500. Would your son owe taxes based on $3,500 or would it be based on some appraised value let’s say $500,000 (assuming the place did not appreciate in 30 years). If your son only had to pay taxes based on $3,500 what would stop people from “selling to themselves” in the future to lower taxes.