And what about home owners that couldn't keep up with rising taxes after purchasing their home? Rising real estate prices were hurting families who saw their tax bills jump based on local housing sales, and it prevents people from being able to accurately budget long-term purchases like housing when they can't anticipate a stable tax rate
Most people who buy their homes for long-term buy it to settle in their neighborhoods and have kids go to the same school, not speculate on price increases and profit from them.
Leave alone the fact that when markets are over-heated, those huge profits can only be locked into huge base prices for any other property that's selling in this peak market. Unless the step 2 after hitting those huge profits involves packing up and moving to MidWest.
>Most people who buy their homes for long-term buy it to settle in their neighborhoods and have kids go to the same school, not speculate on price increases and profit from them.
IF this is the true purpose of Proposition 13, then it would be written far differently. (Greater than 2%, no commercial real estate included, no passing on to children). People are also allowed to sell their home for more than the assessed tax value, precisely because people speculate on price increases of their homes. If that wasn't one of the primary reasons behind Proposition 13 then people would have been OK with only being able to sell their home at the assessed value.
Really though the point of Proposition 13 was to just pay less taxes, "staying in your home" doesn't really come into play. Defending it along those lines is deceptive, and propagates a false narrative.
> People are also allowed to sell their home for more than the assessed tax value, precisely because people speculate on price increases of their homes. If that wasn't one of the primary reasons behind Proposition 13 then people would have been OK with only being able to sell their home at the assessed value.
I am not sure what you're describing is correct - each time I bought a property in California the assessed tax value next year was precisely the sale price.
The process that county assessors use to determine the value of real property was established by Proposition 13. Under this system, when real property is purchased, the county assessor assigns it an assessed value that is equal to its purchase price, or “acquisition value.”
Right now, Prop 13 beneficees have an assessed value of, say $300,000, on a $1,000,000 house. They can sell the house for $1,000,000.
If Prop 13 were actually about keeping people in their homes, then after taking advantage of below-market taxes for so long, they wouldn't be allowed to sell for more than a small percentage more than the tax assessed value.
But Prop 13 is not about keeping people in their homes, it's a selfish grab to not pay taxes, drive up home values, and profit on both ends.
> they wouldn't be allowed to sell for more than a small percentage more than the tax assessed value
This just has a bad smell to it - not only you're inviting corruption and avoidance into the deal (the buyer is asked to bring the check for the assessed value and a suitcase of cash to the deal), the actual revenue collected by the state would fall, and the federal government is likely to contest this setup as it stands to lose out on capital gains.
> Right now, Prop 13 beneficees have an assessed value of, say $300,000, on a $1,000,000 house.
Assuming a very healthy and robust real estate market that grows gangbusters 15% every single year and never falls, it would take 9 years for a $300,000 property to grow into $917,706. It would go over the $1,000,000 sticker during year 10.
Of course, this is assuming ever-lasting 15% valuation increase and no price correction whatsoever, but even in this ideal market the owner has lived there for 9+ years and does not fall qualify for your definition of "keeping people in their home"?
Even when he sells, the cash he has on hand is enough to (surprise!) buy a comparable house, so this crazy speculation scheme is only doable once in life.
This wouldn't solve the problem of state revenue. Of course, it would solve YOUR problem of being able to afford a house because house prices would be fixed, right? Except that there would be way too much competition because now everyone could afford house prices that were fixed to 1960s levels, and you probably still wouldn't be able to get your house.
>#1 they can sell their homes at huge profits (otherwise the taxes would not be hurting them).
I don't know... The spirit of this reminds me too much of landlords paying off tenants to move out of their rental units so that they can reprice rent controlled units to market.
You often can't afford to live In another place in the area even after reaping those profits, in both the ownership and rental situations. Sometimes, all you want to do is keep living in the place you call home.
That was the excuse given at the time. If they had meant it, the law would only apply to primary residences, not second homes or rental properties, much less commercial properties, much less Disneyland.
Limiting the increase percentage would be one way to account for this. The rise in prices of real estate would be limited by the taxation amount - we wouldn't see the current level of property price inflation if it weren't for 13.
The value of the property for tax purposes can be litigated though. Currently not a lot of people do that, since 2% falls within their estimates of acceptable increase in valuation, but if the jump was significant enough, you'd see a lot more contesting and litigation, which would increase collection costs.
Except they effectively are gaining wealth by the increase in their home's value.
Also, there are lots of other factors that make long term financial planning hard, which dwarf changing property tax rates - health, employment changes, children.
what about home owners that couldn't keep up with rising taxes after purchasing their home?
Estate taxes also has this kind of concern trolling.
What about family farmers?! This will improverish those hard working Americans!
All 40 of them.
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It's SO EASY to create easy to administrate common sense rules, so that families can stay in their homes.
Cap property taxes increases and then reassess value when a property is sold.
Provide property tax relief to seniors, handicapped, disabled, etc.
I'm sure there are other strategies.
But, you're probably right, we shouldn't do anything reasonable so long as we can use a few edges cases to create fear, uncertainty, doubt (to better protect the status quo of the money elite).
"The most significant portion of the act is the first paragraph, which limited the tax rate for real estate:
Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties."
Um, yes. You could try understanding the issues involved, instead of googling a link that you don't understand, and then considering yourself now an expert.
What you are describing is the maximum yearly increase in property taxes when a property doesn't change hands.
When a property is sold, it is re-assessed to the sale price.
Source: Homeowner who actually pays property taxes.
I regret my drive by response. I should have anticipated your pedantry and not left you the opening.
Your spirited defense of Prop 13 notes that it currently does reset value during select events.
You continue to ignore, conflate, deny, obfuscate the most salient point: the 1% cap has crippled state and local govt. It certainly has prevented providing the level of services expected. Including by anti-tax jihadists such as yourself.
Cue repetition of talking points. Freedom Markets (tm), government corruption, monopoly on violence, blah blah blah. Go ahead. I'll wait.
As expected, I didn't see an actual apology for your complete misunderstanding over a fundamental issue of Prop 13. Just bleating about state and local governments somehow "crippled" even though there is no evidence of that. I bet you don't even live in San Jose, whereas I have for many years. I suggest you should actually understand the issues. You obviously don't, and instead just prattle off talking points that you googled without bothering to understand them. The Bay Area housing market has been hot for the last 20 years, the vast minority of houses will be owned for more than 20 years, which means that the amount of taxes that were collected has risen tremendously.
But I see fat cat public servants getting ridiculous pensions and 13% raises, and then the politicians coming back to the people for more money by raising taxes. Police services include web sites to record crimes, since they won't actually come by and investigate them.
This is the original reason why Prop 13 was introduced, because politicians went to the well of property tax one too many times, and the public got sick of it. Prop 13 will never go away, despite your best Internet efforts, but little actual physical efforts.
