California Real Estate Practice Exam

What is the annual cap on inflation for local property taxes?

1. 1%

2. 2%

3. 3%

4. 5%

The correct answer is: 2%

The annual cap on inflation for local property taxes is 2%. This means that the local government can increase property taxes by a maximum of 2% each year. Option A, 1%, is incorrect because it is below the actual annual cap of 2%. Option C, 3%, and Option D, 5%, are both higher than the annual cap and therefore incorrect. It is important for local governments to set a cap on inflation for property taxes to ensure that homeowners are not faced with drastic and unaffordable increases in their property tax bills.