In my locale, the assessment is pegged to the sale price, so if you buy a house for $X, the assessed value becomes $X. The city assessor also inspects the house shortly after the sale. In an area with a lot of turnover, the assessments tend to be fairly accurate. A major renovation (requiring a permit) will result in a re-assessment.

In subsequent years, they're supposed to apply a formula, but of course "drift" can occur. And then there's an appeal process.

> A major renovation (requiring a permit) will result in a re-assessment.

Doesn't this just incentivize people to not pull permits on major work? In California contractors often try to talk you out of getting a permit because it's more of a hassle for them, so clearly the contractors aren't liable for doing unpermitted work...

It does, but it's usually the contractor who pulls the permit for you. I suspect enforcement is enough of a deterrent, but who knows. As I understand it, the penalty is that you get to rip out whatever was built without a permit.

For DIY'ers, there's actually a nice program... once you pull a permit, you get to talk with the code inspectors during their office hours, and they will walk you through everything you need to do in order to meet code. A friend of mine built an entire addition this way.

There's no way to hack-proof any taxation mechanism.

That's really nice. Here they just show up after the fact, tell you the first thing they find wrong and then leave.

If it's not to code, it can take many visits to get a full list of issues.

Same in Canada.. always seemed fair enough to me and I assumed it was standard but now I'm curious how many other ways they are and how they shake out.

As for fair:

There is little thought given to how much the individual house is worth, rather it relies on comp sales in the area. For example, a fully renovated house might go for $500k, but another in the neighborhood with the same number of bedrooms and bathrooms in a less desirable location (say the entrance to the neighborhood) might only be able to sell for $400k.

It is also very common for the adjustments upward to be far quicker than adjustments downward.

Then there are definitely examples out there of the city appraised value being driven by desired tax revenue and becoming detached from the reality of sale prices.

In CA, your tax is around 1 percent of the sales price.

If you remodel, you are suspose to have your property reassessed.

In California, your value is nominally bound to the actual value (i.e. it can be reassessed at any time). However, given that prices go up faster than the limits on raising assessed value in Proposition 13, in reality the tax is effectively "Sales price plus MIN(Inflation, 2%) per year"

My current house was being taxed at a value of 1/8 of what I paid for it.