I often get asked how property taxes work here in California,
and although it's convoluted in one sense, it's actually pretty straightforward in another since 1978, when Proposition 13 was passed to bring property taxes under control after a period of skyrocketing prices like we saw in the early 2000s.

I know that each jurisdiction has a little flexibility, so I'm going to work with the maximum that is allowed under Proposition 13.

Let's assume that you bought a house last year and closed escrow on December 31, 2008, so we won't have to do any prorations for part of a year. Then let's assume that you paid $300,000 for that house. Your taxes for the first year, 2009, will be two percent of your purchase price of $300,000, or $6,000. In each of the following years, the preceding year's tax is simply increased by two percent.

The value of your home makes no difference, which is good when home values increase astronomically as we saw in the early 2000s. If the value of your home ever decreases, or doesn't increase much, it's probably worth your while to contest your property tax so that your home is revalued and your taxes are lowered.

So here are your taxes for the next ten years, rounded off to whole numbers:

• 2009 - $300,000 x .02 = $6,000
• 2010 - $6,000 x 1.02 = $6,120
• 2011 - $6,120 x 1.02 = $6,242
• 2012 - $6,242 x 1.02 = $6,367
• 2013 - $6,367 x 1.02 = $6,495
• 2014 - $6,495 x 1.02 = $6,624
• 2015 - $6,624 x 1.02 = $6,757
• 2016 - $6,757 x 1.02 = $6,892
• 2017 - $6,892 x 1.02 = $7,030
• 2018 - $7,030 x 1.02 = $7,171

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