Comment by klardotsh

Fixing owner-occupied property taxes to the fair market value or sale price (whichever is higher) at the time of last change in ownership (by any means: purchase, inheritance, transfer, etc.), and then adjusting that amount annually or semiannually for inflation (to account for folks who bought their house 40 years ago and would otherwise get away with paying $5 in taxes) seems like the most reasonable compromise here if we want to retain property taxation (which is debatable - an income tax can achieve everything a property tax can, without punishing folks who own their house free and clear and no longer wish to work as hard as they did while paying said house off... or can't anymore). Modulo edge cases like inflation grossly outstripping investment returns (hi, 2020s!), this ensures retired folks can stay retired.

Taxation based on the theoretical monetary value you could extract if you sold your primary domicile is probably the dumbest possible policy, because it leads to people being pushed out of their homes (or our of retirement, or into higher-paying jobs they don't want, or whatever). Houses do not have to be viewed as investment vehicles, they can simply be residences.

As far as property taxation on non-owner-occupied units... up for debate, but I think fixing to most recent transfer time's FMV works reasonably well here, too.