What is a disadvantage of an acquisition value-based assessment system?

In an acquisition value-based assessment system, properties are valued based on their most recent purchase price or acquisition cost. This method can lead to the situation where similar properties that may have different acquisition dates are assessed at different values, causing disparities in tax amounts owed. For instance, if two identical homes are in the same neighborhood but one was purchased several years ago and the other recently, the taxes assessed may differ significantly based on the varying acquisition values. This could create a lack of equity among property owners, as those with more recent purchases would likely face higher assessments due to the current market rates reflected in their purchase prices, whereas those who have owned their homes longer benefit from lower assessments based on previous, lower purchase prices.

This situation illustrates a critical challenge in ensuring equitable taxation within a community, as similar properties should ideally be taxed fairly, reflecting their value rather than the timing of their sale. The resulting discrepancies can lead to perceptions of unfairness in the property tax system, affecting community trust and cohesion.