This thought is geared to Californians. I’ll keep this short so that you can get back to your egg nog. Each state treats property taxes a bit differently. In California, we have property tax based on Prop 13.

The Prop 13 highlight is that property taxes are 1% of assessed value and assessed value in California only changes when a property changes ownership. In many other states, the assessed value goes up every year. In California, it does not.

Why is this so important? Here are two reasons:

If you are able to negotiate a good purchase price for your property that is less than the current assessed value, you can call the local tax assessor and convince him to lower your tax bill. I bought a house in 2012 for $160,000 that was assessed at $475,000. I called the assessor and convinced him that my purchase was fair market value. I save $3,000 a year in taxes from one 30 minute phone call.
You can gift up to $1,000,000 worth of real estate to your children tax-free. This exclusion is based on ASSESSED value, not current value. If you hold a property in California for 50 years and it’s now worth $10,000,000, you can give it to your kids tax free for the assessed value of $50,000 (this is a real life example).

So, when you buy a property in California that you’re going to keep for a long time, make sure you get a great deal and that you call the assessors office for a reassessment.