A California property was purchased in 2020 for $700,000. Under Proposition 13, the assessed value has increased by the maximum 2% each year. What is the assessed value of the property in 2025 (after 5 years of 2% annual increases)?
Correct Answer
B) $772,857
Step 1: Apply 2% compound increase for 5 years. Step 2: Year 1 (2021): $700,000 × 1.02 = $714,000. Year 2 (2022): $714,000 × 1.02 = $728,280. Year 3 (2023): $728,280 × 1.02 = $742,846. Year 4 (2024): $742,846 × 1.02 = $757,703. Year 5 (2025): $757,703 × 1.02 = $772,857 (rounded). Alternatively: $700,000 × (1.02)^5 = $700,000 × 1.10408 = $772,857.
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Related Topics & Key Terms
Key Terms:
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A general warranty deed provides the greatest protection to the grantee by guaranteeing that the grantor holds clear title and has the right to sell the property. It includes covenants that protect against all defects in title, even those arising before the grantor owned the property.
Intestate succession is the legal process by which a deceased person's property is distributed according to state law when they die without a valid will. State statutes determine the order of inheritance.
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