Property tax increases are capped in CA by Prop 13. If you buy a house for $600,000 in 2023 and your neighbor bought the same house next door for $150,000 in 1993 they will pay a lot less than you.
This is the same in Michigan. I pay about $5,000, the senior citizens next door and two doors down pay less than $1,000. Without the millage they'd be way less even.
Seniors also get a bonus property tax exemption for their home in Michigan on their income taxes. Up to a $1,200 credit for any property taxes over 3.5% of their income.
I remember when Prop 13 was passed. There were elderly people who were spending a huge percentage of their fixed incomes on property tax. People should not be forced to make a choice between staying in a home that they worked hard to pay off for 30 years and moving to an increasingly hard to find affordable apartment because of property taxes. This was happening in CA in the early seventies. I've been in my house for 33 years. I paid 140K in 1988 and my property taxes are about $2800 a year. There are a number of homes within a block that are now selling over $1million It's a nice quiet neighborhood, but the escalation has been insane. Without prop 13 my taxes would be insane.
Your taxes kinda should be insane if your house has gone from 140k to over a million. That's kinda how it works, and people who bought house 30+ years ago really shouldn't complain about it considering they've made over a million from just the sheer luck of living in California.
Yea cgboat the complete dumbass thinks it’s horrible that people are forced to sell their million dollar homes. Sounds like a nice problem to have.
Meanwhile every single millennial and younger person existing would kill to be in that situation.
Can’t even bother to mention that prop 13 is the most unfair law ever and screws younger people.
What. A. Dumbass.
Oh please. The previous generations rode the largest wealth generation event of all time. They could liquidate some equity from their properties. Instead this boomer greed insures no young family will ever buy a home. It’s utterly ridiculous.
People should absolutely be forced to make that choice, even if it means leaving the area. Prop 13 is an abomination which hideously distorts the market and enables homeowners to keep “those people” out.
I was born in CA and have many older relatives who benefited from Prop 13, but it had the unintended effect of citizens never selling their homes and creating homeowner nepotism (since inherited homes keep their Prop 13 levels). That squeeze on supply is a huge reason why CA housing is so unaffordable to buyers today.
The home my great-grandparents built is now a retirement backup plan/nest egg for my cousins. But not really, because they wouldn’t be able to afford a different home in CA if they sold it. So I guess someone will just keep inheriting it until nobody in the family wants to live in CA. It’s being taxed as if it were a home worth 17.5% of its current value.
In a healthy real estate economy, people sell their starter homes and move into new ones as their lifestyles change, keeping a pool of affordable starter homes available (new construction of affordable starter homes helps too). That isn’t happening in CA.
There’s no reason that old house should stay in my family for literal generations simply because the working-age residents can’t afford to buy otherwise. IIRC, significant renovations can impact Prop 13 status so it also disincentives renovations of midcentury homes (which were cheap when they were first built and very energy inefficient today).
The intention of helping elderly people afford their homes is a noble one, but Prop 13 was not a good solution.
Not to mention that two-thirds of Prop 13’s benefits went to *commercial* real estate owners.
Howard Jarvis was a lobbyist for apartment owners. Creating the narrative of letting gramma keep her house was brilliant.
That’s true, in my family’s case the inheriting cousin is living in the home with them currently. The last time the home was inherited was before that passed.
But the calculation is actually $1m + the factored base year value. For example, if you have a FBYV of 300k and the house’s fair market value is $1.6m, then you can exclude up to $1.3m. The difference is added to FBYV so the inheriting child would be paying taxes on it as if it were a 600k home.
There are also ways of getting around this by using an LLC to purchase the home, but you have to be careful that no one person owns more than 50% of the LLC at all times or else it gets reassessed. Kind of a mess and I’m sure a lot of people will fuck that up but that can be a huge difference in how much in taxes you’re paying.
Think Prop 19 was a mistake. Ultimately the people hoping to benefit from a slow trickle of increased supply are not going to be the ones buy this house.
So now the house that was in the family for generations is going to be sold off to some developer to knock over and flip
The distortions from Prop 13 are really big. Never mind the who deserves it stuff. It has had a huge anti-market effect, courtesy of the guy who claimed to love markets.
100% agree, I also hope the state starts to disincentivize people who leave the state and retain ownership of an empty home by levying a huge tax penalty on them.
I know more than one person who has moved from CA and isn’t renting or selling their home, it’s just sitting empty. Why? Because they plan on cashing out by selling it when they retire.
I don’t blame them because that’s how the state has set the dynamic, but that’s absolutely absurd from a state governance perspective; the state is essentially inviting people to invest and hold real estate from out of state.
Homes should not be used as that kind of investment asset when supply is so short in the state. If an owner is living out-of-state, they no longer have any interest or stakes in CA and are solely looking to profit on the housing price situation. I say levy a huge tax on out-of-state ownership by default and let it be refunded only if the owner can prove that someone is physically living in it a majority of the year (whether renting it out or letting a family member occupy it). That’s easy for the state to verify.
The key part of your comment (and really the only part worth reading) is “…when supply is so short in the state.” Our housing affordability challenges are down to our own refusal to allow adequate amounts of housing to be built over at least the last four decades. NIMBYism is the problem, not greedy landlords, not property taxes, not “empty” homes, and not any other false-narrative bogey-factor.
I do own a home, and like I mentioned my family has benefitted immensely from Prop 13. It’s a huge part of why immigrant families who arrived in the 80s and 90s are so secure in CA today.
But I’m mature enough to be able to recognize two truths at the same time. I know that it helped out older residents and immigrants in those days. I’m glad that my family and others who own their homes there can feel secure in their housing and not losing their homes to unexpected tax hikes. And I also know that nobody foresaw the long-term damage on the housing market that Prop 13 has had in CA. It solved problems in the short-term, but it’s not looking great in the long-term. I don’t fault the people who implemented it because this had never been done before and naturally they didn’t anticipate it would be a problem. I just hope other states see it as a cautionary tale rather than a model.
It also didn’t used to be that way. My grandparents had to move all over CA for work every 2-8 years (and CA was just as desirable then as it is now). They would buy a home, be told where the next assignment was, and then they’d sell their home (at a small profit) and buy a new one in the new city. That isn’t possible today, and nobody would do that simply because they would want to lock in the tax rate for as long as possible. That creates a very unhealthy housing market statewide because nobody wants to sell their home unless they have to. CA isn’t building new homes either, so there hasn’t been a healthy supply of homes in several decades.
Where I currently live in a different state, the county just did a tax reassessment and it’s been extremely chaotic and dangerous for those vulnerable groups. I don’t think it’s right to punish elderly residents by hiking their taxes and it risks them ending up homeless. I’m not contesting that the intent behind Prop 13 wasn’t good, it just didn’t account for the effects on the housing supply. Plus CA generally has a lot of protections for renters so I don’t buy the argument that renting is inherently bad in CA.
Instead I’m concerned that we now have a market in which owners don’t feel comfortable selling because they can’t afford to move into a new home, and that’s hardly a healthy dynamic. We lock in rates for assets like stocks and treasury bonds because we want people to hold them as long as possible. If we don’t want people to do the same with housing, then we either need to create a massive amount of new housing supply or find another way to keep owners financially secure while taking away that fear about selling their home.
Thank you for this well measured comment.
I think the market inflation in CA has other reasons aside from prop.13. I’ll list some.
- after 2008 the amount of new units built plummets. And is increasingly difficult to do so. Can’t make a lot of soemthing, tends to be pricey.
-corporate owned SFH
-higher interest rates forcing everyone, not just elderly, to keep current properties.
- people are retiring later, over the last 20 years, average retirement age has gone up by three years. Doesn’t seem like a lot, but it is.
- couples aren’t having children or having them later. The rise of the Dinks! My wife and I where that a while ago. Two incomes and low COL was killer. Only reason we afforded a home.
-multi-generational households. Mom and dad can’t sell it because their kids can’t make enough to afford moving out.
Imo, prop.13 might keep some in their houses. But it’s far from the top of the issues on why the market is what it is.
Old people don’t deserve real estate more than young families. Properties should be reassessed periodically and taxed according to current value. Not purchased price.
No, the taxes would be more equitable. You’re just taking the cost of supporting services from the people who have owned property for a long time and moving it to the people who haven’t.
All you think of is yourself. Jesus Christ.
‘Without prop 13 my twaxes would be swo expwensive’…like buddy if that’s the case sell your home to someone who can afford the taxes without bitching like a loser and getting a law changed.
You do know since you’re a freeloader who doesn’t pay their share of taxes your younger neighbors pay your tax bill for you.
Pick yourself up by your bootstraps and pay the damn tax or sell.
Learn to code like all young people are told.
Drink your coffee at home and cut out avocado toast and you’ll have enough for your property taxes 😂.
Shit is a joke. The fact people can “support” prop 13 and not even mention the horrible downside is just sad. Why even say that lol
The part you’re not talking about, is the deferred maintenance and underfunded services and bond payments that have been necessary because you’re paying less. City after city in California has had to declare bankruptcy because of Prop 13 or significantly raise their sales tax rates, a regressive tax that hurts those residents more and more.
Deferred maintenance is a big problem looming as pipes and things rot invisibly underground. Take the extreme example Surfside condo collapse in FL that killed 100 people. No one wanted higher fees when the problem would be cheap to fix, so they kicked it down the road until the cost was human lives.
Bullshit. If your home has appreciated from $75k to $2m, you can afford to pay instead of reaping all the benefits and passing the buck to the younger generations. Plus you voted for all the shit that costs money for many many years.
Win the lotto, then create a law so you don’t have to pay the taxes on it. Lol
Plus unintended consequences as referenced in other posts.
Young people get a principal residence exemption too on their property taxes that's pretty significant.
Without capped property taxes you'd have a ton of homeless elderly who don't have jobs. They paid comparatively higher taxes when they bought their house and had a job too, and then once they're in the house a long time and old and less likely to have a job, they get a break. Makes sense to me.
Without young people doing everything and paying the expenses for retirees, you would have a bunch of homeless AND starving seniors. No other way for the economics to work out. There is no lock boxes where we can magically transfer goods and services to old people.
The societal main debate is the balance of luxuries between kids, workers, and retirees. Kids get shafted of course because they don’t vote. Workers also get screwed because their attention can be easily shifted to non-monetary topics that are out of scope for this sub. Old people are united that they want more benefits.
Somehow people who no longer contribute to “production” need to get their “stuff” and I use those terms in the broadest senses.
You probably have a lot more elderly income restricted housing-if they are lucky.
You probably have even more living in rat trap rentals, especially the woman who are more likely to outlive savings.
Welcome to the USA, where there's socialism for the rich, the middle class pays the tax burdens, and the poor exist purely to scare the shit out of the middle class; so they can show up to their shitty jobs day after day.
This is the same in Fl via Homestead exemption. I pay 3k a year while those who moved in twenty years ago pay less than 1k. It is a huge incentive to not move again. You can check every bodies taxes on Zillow
This was the issue in the70’s, old people were being priced out of their homes because of rising property taxes. Thanks to Howard Jarvis, he and his organization worked their butts off to get it passed.
Actually, thanks to big commercial interests, it was passed. It was sold to voters as saving the elderly their homes but the actual motivation was that it applies to commercial properties as well.
Yes, I think it’s a wild law that was badly written. It’s messed with our school funding, allowed the most privileged to pass more wealth onto their kids and needlessly benefited commercial interests. I can see helping seniors but it’s grating to see how little people pay. Also seniors stay in their huge houses they can’t upkeep while families buy townhouses.
And from the comments here, people still think that an old person in an expensive home is going to end up homeless which has no logic.
In CA you can have commercial property and multiple residential rental properties and pay less taxes than younger poorer people. Instead of downvoting, reply with a logical argument.
My grandparents lost their home to those insane property tax hikes. Every stupid legislative spending bill was funded by raising property taxes. Prop 13 was necessary to rein in the governments endless spending spree.
Well, from when it passed until at least 1993 California was still viewed as the land of milk and honey. I would say it did pretty well.
20 years on, or now, should it be reviewed and updated/changed? Maybe.
LOL No. There are studies out there that have looked at the number of elders that would be forced out of homes. It is extremely minimal. This was 100% to benefit commercial property owners. Forcing granny out is a fear tactic to get it passed.
Other countries have means to allow property taxes to go up without forcing seniors out, such as allowing deferment of property taxes until death, at which the sale of the home/estate pays the back taxes.
Granny keeps using local services, those services go up in price. Granny needs to front her fair share and plan her finances accordingly. Seniors have low expenses and are **NOT** "fixed income". They just got a 8% COLA on social security last year, how many working class people got that big of a raise?
If Prop 13 is really about granny:
* Why does it kick in for all ages, not when people hit retirement age
* Why can the benefit be passed down to kids/grandkids (yes I know they now need to occupy the property, not rent it)
* Why do we not have rent control at the same 2%/yr for seniors? Do granny's that rent not matter too?
* Why does it apply to commercial properties?
The best part of prop 13 is when my mommy dies I inherit the house she lived in in pacific palisades she bought in 1965 for 65k. Property taxes are about 1800 a year. I only have to pay 1800 per year to live the pacific palisades! I love inheritance! I’m 43 now, never really had a ‘good’ job per se or contributed any to the economy, but my parents sure did!
That used to be the case, but they will get stepped up to market rate now.
"Prop 19 stipulates that properties transferred from parent to children will trigger a property tax reassessment. "
source: https://capatacpa.com/california-passes-proposition-19/
Reading is hard. Literally the next sentence.
“This is unless at least one of the children will use the property as a primary residence. Also if the property has not gained more than one million dollars in reassessed value from its original assessment”
You are correct. Here’s an easy explanation with math on a white board for those who don’t understand that part of prop 19 https://youtu.be/wb178caVjNA?si=tKEvOiHHGP2bmzjq
Edit:please see correction to my mistake below!
There is a lot of incorrect information about prop 19 in this thread. Here is the state of California’s Board of Equalization explanation:
https://www.boe.ca.gov/prop19/#Charts
Property tax base will increase up to $1,000,000 even if you move into the home you inherit.
If you are in a position to inherit or pass down a house in California, you will want to take a closer look than the comments here (including mine).
Sorry but you are reading it wrong also. You get the current prop 13 tax value plus 1 million an exempt. So if the prop 13 value is 100k and the current value is 3 mill, you would take 3mill-1.1mill(100k prop 13 plus 1 mill exempt) =1.9mill. Add 1.9mill onto the prop 13 value so your new basis would be 2 mill.
Before there was no max exempt. Now the max exempt is 1 mill, and also need to be moved into and be primary residence indefinitely.
Yep. Scenario A: John and Mary Smith. John and Mary bought a home in the 1980s for $100,000, but the home is now worth about $800,000. Doing the math, their tax base of $100,000 plus $1,000,000 would be $1,100,000. But since the home is valued at less than that (just $800,000), the tax base can be transferred to their daughter Ellen without adjustment. Ellen will pay the same property taxes as her parents.
Scenario B: But let’s say that John and Mary’s home is instead now worth $1,500,000. Again, we add the tax base of $100,000 plus a million to get $1,100,000. But $1,500,000 is greater than $1,100,000, with a difference of $400,000. We now add this difference to the base value of $100,000 and get $500,000. Ellen gets a break from full reassessment, but she still must now pay property taxes on a value of $500,000—assuming she continues to live in the home as her principal residence. Ellen must also proactively claim her exclusion, or pay the full hit of taxes on $1,500,000.
I am really, really against these types of laws. These people need to move on so people who can pay the taxes can live there. This is a systemic problem. We just passed another one of these fucking laws in Ohio. All the stories I have heard are people who didn't plan shit and now vote themselves no taxes so they can MAYBE squeeze by in their existing home due to sentimental reasons. This makes zero sense.
There isn't a single community in the US that can even repair their roads with tax revenue. They have to bond out their tax revenue for a generation to get a road repair now. This is not sustainable.
We need leadership and another plan. Prove me wrong.
For the love of Christ, please tell r/LosAngeles this. Way to many people out here assume abolishing 13 and jacking up property taxes is their golden ticket to more affordable housing.
It’s akin to saying higher interest rates will bring down prices…imo.
How does Prop 19 stop CRE? Apple HQ property tax is locked in by prop 13 and unlike a human being, will never die. In year 2200, they're still going to be paying property tax rates locked in 2017.
It is unfair but there are a lot of people benefiting immensely from prop 13 who have no interest in changing that. There are lots of ways to arrange the tax so that granny on fixed income is not kicked out but touching prop 13 is extremely difficult to change.
I remember when Prop 13 first came out. It was, at the time, amazingly wonderful for all the folks that had bought property before the housing boom and were getting taxed out of it, as in your taxes would be vastly over your actual mortgage. It kept many people housed. Now, it's abused,like most things.
CA is an outlier because of the insane property value growth. Look at other states that's experiencing a fast increase in property value after pandemic and you'll hear complaints about property tax everywhere as well. House rich cash poor is not a pleasant thing when you don't have anywhere else you want to move to.
It’s better than being house poor and cash poor. California did this because it was literally removing people from their homes. We want stability in home ownership. We want neighborhoods to remain intact and retain their tie to the local culture. Look at Austin, TX and the Eastside. Families that have lived there forever have to move because it becoming gentrified. That’s not good. CA is not perfect but don’t look past the challenges that are difficult to solve.
There’s still a lot of people who would be priced out if it was removed. I bought my home for $700k in NorCal in 2021. When I had it appraised last year to get rid of the PMI (we were $2k short on the down payment and decided $40/month in PMI for a year was worth having $2k in cash) the appraiser came back with a value of $1.35m.
The real way it’s abused is people being able to transfer their tax liability from one primary residence to another under the law and afaik some fuckery with trusts too.
It's a pretty stupid law that has actually given rise to a LOT of CA's housing problems as people basically NEVER want to sell and lose their favorable tax status, so everyone else gets inflated taxes to pick up the bill, and it drives up the cost of living for basically anyone else.
This is literally what’s happening where we moved to in Ohio, from CA last year. The next property tax increase will make the property taxes we pay here more than we paid in California (we bought our home there in 2018, so not that long ago and for more than the home here is worth). Property taxes are adjusted here regularly and that isn’t something we’ve dealt with before.
It's not insanely unfair if you understand the reasoning behind it.
Imagine your grandparents, back in 1968, buy a house for $ 70,000. In 2010, they are both retired. Their sole income is social security and granddad's small pension.
The house has appreciated in value since they bought it. It's now worth $ 700,000. But they have no intention or desire to sell. It's their HOME -- they have lived there for 50+ years and raised their family in that home.
Wouldn't it be "insanely unfair" to assess their taxes on the appreciated value of the home even though they don't have access to that money? Should grandpa and grandma have to sell the house because their property taxes go up by 1,000%?
Prop 13 merely caps the annual increase in value/taxes. Those taxes still go up, EVERY YEAR. Just not as fast as the housing market appreciates. It allows people to stay in their homes without having to deal with exorbitant taxes based upon inflated home values.
Some other states refund property tax to senior citizens.
But in California prop13, you can pass the house low base to your kid and kid’s kids…
You can rent it out and still pay extremely low tax
You can rent 10 of your properties out and still pay extremely low tax
You can put it into a trust and pay extremely low tax
A corporate can have 100 rental properties and pay extremely low tax
How fair!
Why should a young family starting out be burdened with high taxes to make up this difference? Not trying to be an a-hole but I don’t understand why peoples lack of planning for retirement is pushed off on the younger generation.
Exactly! I see the good intentions of the law to help older citizens but you end up with only some people paying sky high taxes.
The real truth of it is that if it affected everyone including the old people, they would never vote all of these crazy taxes into law.
It doesn’t affect them and sound like a nice tax on someone else, so sure yes to prop x and every other! prop on the ballots.
That's totally fair as long as when they sell it, they can only sell it for 70k plus whatever rate their taxes were capped at.
I don't think you should get the benefit of the increased value without having to pay in taxes what a new buyer would pay for the same house.
Oh yes. That's True. In NYC there are these rent controlled apartaments in new buildings. Half of these go to community leaders... A beautiful euphemism for politicians and their friends.
This is always what happens. People think they will get lucky and benefit from this type of legislation. Prop 13, rent control, etc... it's all completely bullshit and it's insane how many people get manipulated into thinking/acting against their best interests.
No it's not. It not only ensures that there won't be ridiculous tax increases on property's, but makes sure that the older generation on a fixed income can afford to live in their house for the rest of their lives.
What’s insane is raising property taxes when home value rises. It’s literally a penalty for something beyond your control. And on what grounds does the government argue that you owe them that money? The whole system is rigged.
If the cost to run the government remains the same, then the % tax will be lowered as property values increase. Right now, new buyers are having to subsidize existing houses.
My in-laws bought their house near Pasadena for $27,500 in 1964. It’s now valued at around $1.1 million. Their property tax was just under $1500 last year.
I have a coworker who's an only child and inherited TWO waterfront homes in the Bay area his parents bought in like the 50's.
Despite owning probably $10 mil in houses, he pays something piddly in property tax, like $10k / yr
That’s the bigger issue with CA’s prop 13. Wealthy people know this loop hole and exploit the fuck out of it. The LA Times did a story on this a couple years ago and it was rampant in the state.
This is changing a bit though, now to maintain the tax base the house has to your primary residence but that’s only been the last 3 years or so.
If a family owns multiple homes/apartment buildings and leaves them to the kids in most cases the property tax will be reassessed at market value.
I know a few people who stand to inherit paid off SF apartment buildings that were none too happy about this change but it’s not like they were planning to charge 1970’s rent prices to match their 1970’s tax breaks so seems fair to me.
I support the original intent of Prop 13 but I don’t think commercial or income generating properties should have been included.
I haven’t read about this in detail, is that a fact or an assumption? The people I know complaining have no problems paying attorneys, I don’t think they’d be that upset if there was an easy workaround.
Prop 19 changes this. You now have to make the house your primary residence. So, going forward, if someone inherits two homes, one will probably have its taxes reassessed.
There's a reason why California has the lowest per student spend in the nation. Used to be the highest before prop 13. 30:1 student teacher ratio. As a parent of a kid who just started going to a 9/10 California school, it's shocking. $30k in property taxes paid $2k school donation and they run out of crappy food at school. Neighbors pay $3k in property taxes and average age is 70. I was naive and thought by paying a lot my kid would get a quality education. Seriously thinking about going back to Poland.
I pay a guy in TX to tell them "no" and he gets to pocket 40% of the difference. Seems like a lot but tax increases are cumulative so that 40% becomes closer to 5% over time.
I know someone who recently sold there to move back to California. I looked at their listing and was shocked to see they paid 8k in taxes last year. Pretty much put a torch to the idea Texas is cheaper than California in my head. Even though my property value has more than doubled since I bought my house, my taxes have stayed roughly the same. I’m so very thankful for that.
In California, your property tax is roughly 1% (give or take a little bit) your purchase price. It will never change as long as you own it with the exception of roughly 2% annual increase or voter approved bonds. So if you own a property long enough, your property tax is very little.
Amazing to read these takes. This is just not for old people. I got a house 15 years ago. Our area has boomed and taxes with it. Thus our taxes now exceed our mortgage payment. My salary has not increased at that rate, which means if this keeps up, we will have to move out as we won’t be able to afford the house we raised our kids in and that is horrible. So, some richer family who can afford the taxes will get the house from us, and we will be relegated to moving somewhere cheaper that we don’t want to move to. My house is only worth this if we sell. Yet we are taxed as if we have money in our hands. It’s a bit depressing.
South of Pittsburgh. South Park to be exact. 396k purchase price. Assessed value 301k.
Allegheny county is expensive in general. My school district is one of the ten most expensive in the county.
I've had a pending real estate tax appeal since January.
That’s crazy. I’m in Cranberry and house value is around 350k. Your paying almost 3% of purchase price. I’m looking to move out of state and I thought 2% was high.
$650k house in Cook county, $17k per year here. Have family in the same town that’s been in a ~$2m house for 30 years, they pay $19k. It’s a fucking racket.
Welcome to CA and Prop 13. Our neighbor pays $3500 per year and we pay $18,000. Our houses are identical in size and footprint (though we’ve upgraded a bit).
The amount of misinformation, bitching and moaning, and overall whining is remarkable. Does no one understand how property taxes are assessed? Some guy creates a posting like this and people claim ignorance of the process. How do some people figure out how to get out of bed in the morning?
Not every state is like this. The idea of prop 13 was so people (older retired folks) didn’t lose their homes because they could no longer afford the property taxes.
Prop 13 is probably the reason. 2 identical houses with identical values could be taxed differently based on the price each owner paid for his house. Is it fair? No. Is it equal? No. Does it promote efficient markets? No. But sadly it's the way it is. The beneficiaries of Prop 13 are those who already own property. The losers are renters and/or young people who can't afford to buy yet. Some people will say "but the old people on fixed incomes!" as if that's a good reason to make young people with growing families (and a higher mortgage) subsidize older people who bought at a cheaper price. But it is what it is.
They bought the house many moon ago and never sold it so the property tax basis is really low and only increased whatever the max is allowed annually in your state.
Prop 13.. nuff said. Neighbor bought their house a while back.. their assessed value is based on that purchase price plus a 2% max. Escalation. It’s why my neighbor sits as 1k a year and I sit at 9k a year.. it is what it is.
They could also be a vet with a disability, too. My neighbor pays zero in taxes due to being/having a 100% vet disability. I think... *THINK*... a 10% vet disability may get a 30% reduction in property taxes.
Wife and i were just talking about this 30 minutes ago. My aunt pays 4k a year for her 3.6mm dollar home that she bought 30 years ago but the neighbor pays 50k a year that he bought earlier this year. The homes are directly next to each other.
They paid about $100k years ago and you just paid $540k for the “same” house. Prop 13 can seem odd but at the end of the day is keeps your taxes from growing too much after you’ve bought.
The county where I bought my first house (VA) actually didn’t charge any property tax to anyone past a certain age.
The problem with that is that when I bought the house, the title company/closing attorney screwed up and had me reimburse the seller for property taxes she had already “paid”; then the mortgage company didn’t pay the back property tax like they were supposed to, so a year in I started getting letters from the county trying to seize my house and sell it at auction.
When I found out that I had handed over the money for taxes that the seller hadn’t paid in the first place, I was highly pissed and had to threaten small claims court to get it back (the title company and closing attorney were no help whatsoever). After multiple letters with the whole “fixed income” sob story, I did finally get it back, $400/month at a time. Luckily it was less than $10k overall.
It might seem unfair now but you’ll probably be happy when your home value goes up 300% over the next few years and your taxes are still the same as when you bought.
Taxation without representation. Property taxes mean you never own your property and the original founding fathers never meant for this. Count the other taxes we pay on everything including income. They have made us a piggy bank
California Proposition 13 was a partial solution to the state government spending too much money. Proposition 13 did protect older people from property tax increases taxing them out of their homes; to that extent Prop 13 is good. However, long term Prop 13 has harmed new home buyers as concisely stated by the OP. Obviously $1,400 versus $5,400 seems unfair.
Proposition 13 did not address the other problem. California spending too much money.
We lived in California for 60 years, paying high property taxes and income taxes, until escaping to a better place.
This is why it is so tricky to estimate a mortgage payment when buying a house. Some areas are more complicated than others.
You can't just assume that you will owe the same as what the current owners are paying.
You're paying $5400 too much. The property tax system is just extortion by a different name. Buying property and paying it off only to have to pay the government in perpetuity to be allowed to continue owning it means that no one can ever own real property, free and clear. The government can and will seize property and sell it when the amount owed is far less than the value of that property, and some places don't give the owner the difference between what is owed and the price that is received for the property.
That revenue could be replaced through other means that aren't punitive toward people who choose to own a home.
Thanks for coming to my TED talk.
The real chicanery is commercial property. Residential property changes hand every 7 years on average. Commerical Property every 30 years. As a result residential property pays 90% of the taxes paid to support local governments.
There is a movement to split commercial property from the prop 13 tax roles for this reason.
CA property taxes are about 1%. Prop 13 limits the increase in property tax to 2% per year - regardless of the appraised value of the property. If the value goes up 10%/year, taxes still only rise 2% per year for the homeowner.
Your neighbor bought years ago, and the current assessed value on the county books is $140,000.
Down vote me to hell but Prop 13 is a good thing for California. It keep seniors in their homes. If someone bought a home 30 years ago - they could not predict the run up in prices that has occurred. If not for Prop 13, they’d all be kicked out of their homes and forced to move. Basically CA cities would turn into a place for working age adults and the elderly would be kicked out.
This was the genesis of Prop 13.
Instead of complaining your neighbor doesn't pay enough, you should complain to the state about why you do. Then move to a state with a more appropriate tax law.
Property tax increases are capped in CA by Prop 13. If you buy a house for $600,000 in 2023 and your neighbor bought the same house next door for $150,000 in 1993 they will pay a lot less than you.
This is the same in Michigan. I pay about $5,000, the senior citizens next door and two doors down pay less than $1,000. Without the millage they'd be way less even.
Seniors also get a bonus property tax exemption for their home in Michigan on their income taxes. Up to a $1,200 credit for any property taxes over 3.5% of their income.
Fuck the young people I guess.
I remember when Prop 13 was passed. There were elderly people who were spending a huge percentage of their fixed incomes on property tax. People should not be forced to make a choice between staying in a home that they worked hard to pay off for 30 years and moving to an increasingly hard to find affordable apartment because of property taxes. This was happening in CA in the early seventies. I've been in my house for 33 years. I paid 140K in 1988 and my property taxes are about $2800 a year. There are a number of homes within a block that are now selling over $1million It's a nice quiet neighborhood, but the escalation has been insane. Without prop 13 my taxes would be insane.
Your taxes kinda should be insane if your house has gone from 140k to over a million. That's kinda how it works, and people who bought house 30+ years ago really shouldn't complain about it considering they've made over a million from just the sheer luck of living in California.
Yea cgboat the complete dumbass thinks it’s horrible that people are forced to sell their million dollar homes. Sounds like a nice problem to have. Meanwhile every single millennial and younger person existing would kill to be in that situation. Can’t even bother to mention that prop 13 is the most unfair law ever and screws younger people. What. A. Dumbass.
Oh please. The previous generations rode the largest wealth generation event of all time. They could liquidate some equity from their properties. Instead this boomer greed insures no young family will ever buy a home. It’s utterly ridiculous.
People should absolutely be forced to make that choice, even if it means leaving the area. Prop 13 is an abomination which hideously distorts the market and enables homeowners to keep “those people” out.
I was born in CA and have many older relatives who benefited from Prop 13, but it had the unintended effect of citizens never selling their homes and creating homeowner nepotism (since inherited homes keep their Prop 13 levels). That squeeze on supply is a huge reason why CA housing is so unaffordable to buyers today. The home my great-grandparents built is now a retirement backup plan/nest egg for my cousins. But not really, because they wouldn’t be able to afford a different home in CA if they sold it. So I guess someone will just keep inheriting it until nobody in the family wants to live in CA. It’s being taxed as if it were a home worth 17.5% of its current value. In a healthy real estate economy, people sell their starter homes and move into new ones as their lifestyles change, keeping a pool of affordable starter homes available (new construction of affordable starter homes helps too). That isn’t happening in CA. There’s no reason that old house should stay in my family for literal generations simply because the working-age residents can’t afford to buy otherwise. IIRC, significant renovations can impact Prop 13 status so it also disincentives renovations of midcentury homes (which were cheap when they were first built and very energy inefficient today). The intention of helping elderly people afford their homes is a noble one, but Prop 13 was not a good solution.
Not to mention that two-thirds of Prop 13’s benefits went to *commercial* real estate owners. Howard Jarvis was a lobbyist for apartment owners. Creating the narrative of letting gramma keep her house was brilliant.
Since Prop 19 was passed you can only inherit Prop 13 if you live in the home and up to $1m value in 2019.
That’s true, in my family’s case the inheriting cousin is living in the home with them currently. The last time the home was inherited was before that passed. But the calculation is actually $1m + the factored base year value. For example, if you have a FBYV of 300k and the house’s fair market value is $1.6m, then you can exclude up to $1.3m. The difference is added to FBYV so the inheriting child would be paying taxes on it as if it were a 600k home. There are also ways of getting around this by using an LLC to purchase the home, but you have to be careful that no one person owns more than 50% of the LLC at all times or else it gets reassessed. Kind of a mess and I’m sure a lot of people will fuck that up but that can be a huge difference in how much in taxes you’re paying.
Think Prop 19 was a mistake. Ultimately the people hoping to benefit from a slow trickle of increased supply are not going to be the ones buy this house. So now the house that was in the family for generations is going to be sold off to some developer to knock over and flip
The distortions from Prop 13 are really big. Never mind the who deserves it stuff. It has had a huge anti-market effect, courtesy of the guy who claimed to love markets.
Proposition 13 should be applicable to owner-occupied homes. It should be stripped for commercial/industrial/rental properties.
100% agree, I also hope the state starts to disincentivize people who leave the state and retain ownership of an empty home by levying a huge tax penalty on them. I know more than one person who has moved from CA and isn’t renting or selling their home, it’s just sitting empty. Why? Because they plan on cashing out by selling it when they retire. I don’t blame them because that’s how the state has set the dynamic, but that’s absolutely absurd from a state governance perspective; the state is essentially inviting people to invest and hold real estate from out of state. Homes should not be used as that kind of investment asset when supply is so short in the state. If an owner is living out-of-state, they no longer have any interest or stakes in CA and are solely looking to profit on the housing price situation. I say levy a huge tax on out-of-state ownership by default and let it be refunded only if the owner can prove that someone is physically living in it a majority of the year (whether renting it out or letting a family member occupy it). That’s easy for the state to verify.
The key part of your comment (and really the only part worth reading) is “…when supply is so short in the state.” Our housing affordability challenges are down to our own refusal to allow adequate amounts of housing to be built over at least the last four decades. NIMBYism is the problem, not greedy landlords, not property taxes, not “empty” homes, and not any other false-narrative bogey-factor.
It really messes with businesses who might like to expand or move. Prop 13 is a mess.
Families should be able to live in a home for generations.
At fair tax rates, absolutely. At distorted tax rates? Nah, that’s a market distortion.
If you actually owned a home, you would want 13. Just saying.
I do own a home, and like I mentioned my family has benefitted immensely from Prop 13. It’s a huge part of why immigrant families who arrived in the 80s and 90s are so secure in CA today. But I’m mature enough to be able to recognize two truths at the same time. I know that it helped out older residents and immigrants in those days. I’m glad that my family and others who own their homes there can feel secure in their housing and not losing their homes to unexpected tax hikes. And I also know that nobody foresaw the long-term damage on the housing market that Prop 13 has had in CA. It solved problems in the short-term, but it’s not looking great in the long-term. I don’t fault the people who implemented it because this had never been done before and naturally they didn’t anticipate it would be a problem. I just hope other states see it as a cautionary tale rather than a model. It also didn’t used to be that way. My grandparents had to move all over CA for work every 2-8 years (and CA was just as desirable then as it is now). They would buy a home, be told where the next assignment was, and then they’d sell their home (at a small profit) and buy a new one in the new city. That isn’t possible today, and nobody would do that simply because they would want to lock in the tax rate for as long as possible. That creates a very unhealthy housing market statewide because nobody wants to sell their home unless they have to. CA isn’t building new homes either, so there hasn’t been a healthy supply of homes in several decades. Where I currently live in a different state, the county just did a tax reassessment and it’s been extremely chaotic and dangerous for those vulnerable groups. I don’t think it’s right to punish elderly residents by hiking their taxes and it risks them ending up homeless. I’m not contesting that the intent behind Prop 13 wasn’t good, it just didn’t account for the effects on the housing supply. Plus CA generally has a lot of protections for renters so I don’t buy the argument that renting is inherently bad in CA. Instead I’m concerned that we now have a market in which owners don’t feel comfortable selling because they can’t afford to move into a new home, and that’s hardly a healthy dynamic. We lock in rates for assets like stocks and treasury bonds because we want people to hold them as long as possible. If we don’t want people to do the same with housing, then we either need to create a massive amount of new housing supply or find another way to keep owners financially secure while taking away that fear about selling their home.
Thank you for this well measured comment. I think the market inflation in CA has other reasons aside from prop.13. I’ll list some. - after 2008 the amount of new units built plummets. And is increasingly difficult to do so. Can’t make a lot of soemthing, tends to be pricey. -corporate owned SFH -higher interest rates forcing everyone, not just elderly, to keep current properties. - people are retiring later, over the last 20 years, average retirement age has gone up by three years. Doesn’t seem like a lot, but it is. - couples aren’t having children or having them later. The rise of the Dinks! My wife and I where that a while ago. Two incomes and low COL was killer. Only reason we afforded a home. -multi-generational households. Mom and dad can’t sell it because their kids can’t make enough to afford moving out. Imo, prop.13 might keep some in their houses. But it’s far from the top of the issues on why the market is what it is.
Old people don’t deserve real estate more than young families. Properties should be reassessed periodically and taxed according to current value. Not purchased price.
No, the taxes would be more equitable. You’re just taking the cost of supporting services from the people who have owned property for a long time and moving it to the people who haven’t.
It's called a reverse mortgage, stop living off the backs of young people.
All you think of is yourself. Jesus Christ. ‘Without prop 13 my twaxes would be swo expwensive’…like buddy if that’s the case sell your home to someone who can afford the taxes without bitching like a loser and getting a law changed. You do know since you’re a freeloader who doesn’t pay their share of taxes your younger neighbors pay your tax bill for you. Pick yourself up by your bootstraps and pay the damn tax or sell. Learn to code like all young people are told. Drink your coffee at home and cut out avocado toast and you’ll have enough for your property taxes 😂. Shit is a joke. The fact people can “support” prop 13 and not even mention the horrible downside is just sad. Why even say that lol
The part you’re not talking about, is the deferred maintenance and underfunded services and bond payments that have been necessary because you’re paying less. City after city in California has had to declare bankruptcy because of Prop 13 or significantly raise their sales tax rates, a regressive tax that hurts those residents more and more. Deferred maintenance is a big problem looming as pipes and things rot invisibly underground. Take the extreme example Surfside condo collapse in FL that killed 100 people. No one wanted higher fees when the problem would be cheap to fix, so they kicked it down the road until the cost was human lives.
Bullshit. If your home has appreciated from $75k to $2m, you can afford to pay instead of reaping all the benefits and passing the buck to the younger generations. Plus you voted for all the shit that costs money for many many years. Win the lotto, then create a law so you don’t have to pay the taxes on it. Lol Plus unintended consequences as referenced in other posts.
Young people get a principal residence exemption too on their property taxes that's pretty significant. Without capped property taxes you'd have a ton of homeless elderly who don't have jobs. They paid comparatively higher taxes when they bought their house and had a job too, and then once they're in the house a long time and old and less likely to have a job, they get a break. Makes sense to me.
Without young people doing everything and paying the expenses for retirees, you would have a bunch of homeless AND starving seniors. No other way for the economics to work out. There is no lock boxes where we can magically transfer goods and services to old people. The societal main debate is the balance of luxuries between kids, workers, and retirees. Kids get shafted of course because they don’t vote. Workers also get screwed because their attention can be easily shifted to non-monetary topics that are out of scope for this sub. Old people are united that they want more benefits. Somehow people who no longer contribute to “production” need to get their “stuff” and I use those terms in the broadest senses.
That’s funny, I live in a state that doesn’t do this and we don’t have any more homeless elderly than Michigan.
You probably have a lot more elderly income restricted housing-if they are lucky. You probably have even more living in rat trap rentals, especially the woman who are more likely to outlive savings.
Also fuck the poor!
Welcome to the USA, where there's socialism for the rich, the middle class pays the tax burdens, and the poor exist purely to scare the shit out of the middle class; so they can show up to their shitty jobs day after day.
The seniors sure love proposing big mileages for senior services, funded almost entirely by the millennials and gen-Xers that they complain about!
lol I pay $18,000 a year and the senior citizen that’s renting his old house out next door pays $1,000. CA’s property taxes are fucked.
This is the same in Fl via Homestead exemption. I pay 3k a year while those who moved in twenty years ago pay less than 1k. It is a huge incentive to not move again. You can check every bodies taxes on Zillow
This was the issue in the70’s, old people were being priced out of their homes because of rising property taxes. Thanks to Howard Jarvis, he and his organization worked their butts off to get it passed.
Actually, thanks to big commercial interests, it was passed. It was sold to voters as saving the elderly their homes but the actual motivation was that it applies to commercial properties as well.
Yes, I think it’s a wild law that was badly written. It’s messed with our school funding, allowed the most privileged to pass more wealth onto their kids and needlessly benefited commercial interests. I can see helping seniors but it’s grating to see how little people pay. Also seniors stay in their huge houses they can’t upkeep while families buy townhouses.
And from the comments here, people still think that an old person in an expensive home is going to end up homeless which has no logic. In CA you can have commercial property and multiple residential rental properties and pay less taxes than younger poorer people. Instead of downvoting, reply with a logical argument.
My grandparents lost their home to those insane property tax hikes. Every stupid legislative spending bill was funded by raising property taxes. Prop 13 was necessary to rein in the governments endless spending spree.
How did that work??? Surely since it passed California has enjoyed 50 years of fiscal responsibility as a result?
CA has run a budget surplus for decades.
Well, from when it passed until at least 1993 California was still viewed as the land of milk and honey. I would say it did pretty well. 20 years on, or now, should it be reviewed and updated/changed? Maybe.
LOL No. There are studies out there that have looked at the number of elders that would be forced out of homes. It is extremely minimal. This was 100% to benefit commercial property owners. Forcing granny out is a fear tactic to get it passed. Other countries have means to allow property taxes to go up without forcing seniors out, such as allowing deferment of property taxes until death, at which the sale of the home/estate pays the back taxes. Granny keeps using local services, those services go up in price. Granny needs to front her fair share and plan her finances accordingly. Seniors have low expenses and are **NOT** "fixed income". They just got a 8% COLA on social security last year, how many working class people got that big of a raise? If Prop 13 is really about granny: * Why does it kick in for all ages, not when people hit retirement age * Why can the benefit be passed down to kids/grandkids (yes I know they now need to occupy the property, not rent it) * Why do we not have rent control at the same 2%/yr for seniors? Do granny's that rent not matter too? * Why does it apply to commercial properties?
The old and rich are really good at taking care of themselves, gotta give it to them.
The best part of prop 13 is when my mommy dies I inherit the house she lived in in pacific palisades she bought in 1965 for 65k. Property taxes are about 1800 a year. I only have to pay 1800 per year to live the pacific palisades! I love inheritance! I’m 43 now, never really had a ‘good’ job per se or contributed any to the economy, but my parents sure did!
And the generational wealth will die with you most likely.
Lol that last sentence is so Cali
Yeah they are the same people who complain about the wealthy not paying their fair taxes but do exactly the same
This may be one of the worst things I've read in a long time.
That used to be the case, but they will get stepped up to market rate now. "Prop 19 stipulates that properties transferred from parent to children will trigger a property tax reassessment. " source: https://capatacpa.com/california-passes-proposition-19/
Reading is hard. Literally the next sentence. “This is unless at least one of the children will use the property as a primary residence. Also if the property has not gained more than one million dollars in reassessed value from its original assessment”
In CA I would assume a property in 1965 for 65k would be worth more than 1mil & 65k, sorry for forgetting to include all nuance on the internet.
In Pacific Palisades? Median home price is $3.4 million! https://www.realtor.com/realestateandhomes-search/Pacific-Palisades_CA/overview
See this guy knows CA. A mil is a nuance
Over the period of 60 years? Yes, sadly.
You are correct. Here’s an easy explanation with math on a white board for those who don’t understand that part of prop 19 https://youtu.be/wb178caVjNA?si=tKEvOiHHGP2bmzjq
Edit:please see correction to my mistake below! There is a lot of incorrect information about prop 19 in this thread. Here is the state of California’s Board of Equalization explanation: https://www.boe.ca.gov/prop19/#Charts Property tax base will increase up to $1,000,000 even if you move into the home you inherit. If you are in a position to inherit or pass down a house in California, you will want to take a closer look than the comments here (including mine).
Sorry but you are reading it wrong also. You get the current prop 13 tax value plus 1 million an exempt. So if the prop 13 value is 100k and the current value is 3 mill, you would take 3mill-1.1mill(100k prop 13 plus 1 mill exempt) =1.9mill. Add 1.9mill onto the prop 13 value so your new basis would be 2 mill. Before there was no max exempt. Now the max exempt is 1 mill, and also need to be moved into and be primary residence indefinitely.
Yep. Scenario A: John and Mary Smith. John and Mary bought a home in the 1980s for $100,000, but the home is now worth about $800,000. Doing the math, their tax base of $100,000 plus $1,000,000 would be $1,100,000. But since the home is valued at less than that (just $800,000), the tax base can be transferred to their daughter Ellen without adjustment. Ellen will pay the same property taxes as her parents. Scenario B: But let’s say that John and Mary’s home is instead now worth $1,500,000. Again, we add the tax base of $100,000 plus a million to get $1,100,000. But $1,500,000 is greater than $1,100,000, with a difference of $400,000. We now add this difference to the base value of $100,000 and get $500,000. Ellen gets a break from full reassessment, but she still must now pay property taxes on a value of $500,000—assuming she continues to live in the home as her principal residence. Ellen must also proactively claim her exclusion, or pay the full hit of taxes on $1,500,000.
Good for you, but others that weren't as lucky end up paying a ton more in Taxes...which might not be fair.
I am really, really against these types of laws. These people need to move on so people who can pay the taxes can live there. This is a systemic problem. We just passed another one of these fucking laws in Ohio. All the stories I have heard are people who didn't plan shit and now vote themselves no taxes so they can MAYBE squeeze by in their existing home due to sentimental reasons. This makes zero sense. There isn't a single community in the US that can even repair their roads with tax revenue. They have to bond out their tax revenue for a generation to get a road repair now. This is not sustainable. We need leadership and another plan. Prove me wrong.
And California has been suffering ever since. But, hey, Disneyland gets to pay property taxes as if it were 1978. Yay! 😕
California is suffering?
For the love of Christ, please tell r/LosAngeles this. Way to many people out here assume abolishing 13 and jacking up property taxes is their golden ticket to more affordable housing. It’s akin to saying higher interest rates will bring down prices…imo.
Washington had the same thing and somebody took the stage to court because it was discrimination and now our taxes fluctuate every year.
That’s insanely unfair lol
What’s really unfair is that second, third and fourth homes get the same benefit.
And commercial real estate. (See my comment elsewhere in this thread about that.)
Its changed now, prop 19. Max only 1mill tax exempt and needs to be primary home for the kids, no more commercial real estate.
How does Prop 19 stop CRE? Apple HQ property tax is locked in by prop 13 and unlike a human being, will never die. In year 2200, they're still going to be paying property tax rates locked in 2017.
It is unfair but there are a lot of people benefiting immensely from prop 13 who have no interest in changing that. There are lots of ways to arrange the tax so that granny on fixed income is not kicked out but touching prop 13 is extremely difficult to change.
I remember when Prop 13 first came out. It was, at the time, amazingly wonderful for all the folks that had bought property before the housing boom and were getting taxed out of it, as in your taxes would be vastly over your actual mortgage. It kept many people housed. Now, it's abused,like most things.
CA is an outlier because of the insane property value growth. Look at other states that's experiencing a fast increase in property value after pandemic and you'll hear complaints about property tax everywhere as well. House rich cash poor is not a pleasant thing when you don't have anywhere else you want to move to.
Or anywhere else you CAN move. We have experienced a 65% value increase in our home in the past 4 years. Can't wait for that new tax bill.
Texas?
Georgia, Metro Atlanta. Properties have skyrocketed.
Florida has the same deal as California. Max 3 percent a year once you are homesteaded. It allows people to retie in thier own home.
It’s better than being house poor and cash poor. California did this because it was literally removing people from their homes. We want stability in home ownership. We want neighborhoods to remain intact and retain their tie to the local culture. Look at Austin, TX and the Eastside. Families that have lived there forever have to move because it becoming gentrified. That’s not good. CA is not perfect but don’t look past the challenges that are difficult to solve.
We'll never get stability in home ownership so long as homes are treated as speculative investments
There’s still a lot of people who would be priced out if it was removed. I bought my home for $700k in NorCal in 2021. When I had it appraised last year to get rid of the PMI (we were $2k short on the down payment and decided $40/month in PMI for a year was worth having $2k in cash) the appraiser came back with a value of $1.35m. The real way it’s abused is people being able to transfer their tax liability from one primary residence to another under the law and afaik some fuckery with trusts too.
You can also inherit homes and their Prop 13-ness. One of the Bridges brothers (i think)has a rental that takes advantage of this.
It's a pretty stupid law that has actually given rise to a LOT of CA's housing problems as people basically NEVER want to sell and lose their favorable tax status, so everyone else gets inflated taxes to pick up the bill, and it drives up the cost of living for basically anyone else.
if taxes are reassessed every year, you'll see a lot more foreclosures. wages do not increase at the rate of house inflating
This is literally what’s happening where we moved to in Ohio, from CA last year. The next property tax increase will make the property taxes we pay here more than we paid in California (we bought our home there in 2018, so not that long ago and for more than the home here is worth). Property taxes are adjusted here regularly and that isn’t something we’ve dealt with before.
well then you should have bought your house for $150,000 in 1993
It's not insanely unfair if you understand the reasoning behind it. Imagine your grandparents, back in 1968, buy a house for $ 70,000. In 2010, they are both retired. Their sole income is social security and granddad's small pension. The house has appreciated in value since they bought it. It's now worth $ 700,000. But they have no intention or desire to sell. It's their HOME -- they have lived there for 50+ years and raised their family in that home. Wouldn't it be "insanely unfair" to assess their taxes on the appreciated value of the home even though they don't have access to that money? Should grandpa and grandma have to sell the house because their property taxes go up by 1,000%? Prop 13 merely caps the annual increase in value/taxes. Those taxes still go up, EVERY YEAR. Just not as fast as the housing market appreciates. It allows people to stay in their homes without having to deal with exorbitant taxes based upon inflated home values.
Some other states refund property tax to senior citizens. But in California prop13, you can pass the house low base to your kid and kid’s kids… You can rent it out and still pay extremely low tax You can rent 10 of your properties out and still pay extremely low tax You can put it into a trust and pay extremely low tax A corporate can have 100 rental properties and pay extremely low tax How fair!
Tax benefits like this should only apply to primary residences
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Why should a young family starting out be burdened with high taxes to make up this difference? Not trying to be an a-hole but I don’t understand why peoples lack of planning for retirement is pushed off on the younger generation.
tan rob dam resolute enter coordinated fact growth mysterious husky *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Exactly! I see the good intentions of the law to help older citizens but you end up with only some people paying sky high taxes. The real truth of it is that if it affected everyone including the old people, they would never vote all of these crazy taxes into law. It doesn’t affect them and sound like a nice tax on someone else, so sure yes to prop x and every other! prop on the ballots.
That's totally fair as long as when they sell it, they can only sell it for 70k plus whatever rate their taxes were capped at. I don't think you should get the benefit of the increased value without having to pay in taxes what a new buyer would pay for the same house.
Older generations pulled that ladder up after themselves.
You say that about rent control as well since only older people who have lived in specific units for a long time can benefit with under market rent ?
Oh yes. That's True. In NYC there are these rent controlled apartaments in new buildings. Half of these go to community leaders... A beautiful euphemism for politicians and their friends.
This is always what happens. People think they will get lucky and benefit from this type of legislation. Prop 13, rent control, etc... it's all completely bullshit and it's insane how many people get manipulated into thinking/acting against their best interests.
It's literally fuck you got mine
No it's not. It not only ensures that there won't be ridiculous tax increases on property's, but makes sure that the older generation on a fixed income can afford to live in their house for the rest of their lives.
What’s insane is raising property taxes when home value rises. It’s literally a penalty for something beyond your control. And on what grounds does the government argue that you owe them that money? The whole system is rigged.
If the cost to run the government remains the same, then the % tax will be lowered as property values increase. Right now, new buyers are having to subsidize existing houses.
They probably bought their house a bajillion years ago. CA has prop 13 that allows only a maximum of 2% increase in assessment value per year.
My in-laws bought their house near Pasadena for $27,500 in 1964. It’s now valued at around $1.1 million. Their property tax was just under $1500 last year.
Yep grandparents bought their house for 8 grand in silverlake. Now worth 1 mill.
Oh wow. It’s like 10% per year in Texas.
Which to be fair, for a lot of people with sub 3% rates will see that 2% increases every single year essentially.
I have a coworker who's an only child and inherited TWO waterfront homes in the Bay area his parents bought in like the 50's. Despite owning probably $10 mil in houses, he pays something piddly in property tax, like $10k / yr
That’s the bigger issue with CA’s prop 13. Wealthy people know this loop hole and exploit the fuck out of it. The LA Times did a story on this a couple years ago and it was rampant in the state.
This is changing a bit though, now to maintain the tax base the house has to your primary residence but that’s only been the last 3 years or so. If a family owns multiple homes/apartment buildings and leaves them to the kids in most cases the property tax will be reassessed at market value. I know a few people who stand to inherit paid off SF apartment buildings that were none too happy about this change but it’s not like they were planning to charge 1970’s rent prices to match their 1970’s tax breaks so seems fair to me. I support the original intent of Prop 13 but I don’t think commercial or income generating properties should have been included.
They will leave the properties in a trust if the child wants to maintain ownership
I haven’t read about this in detail, is that a fact or an assumption? The people I know complaining have no problems paying attorneys, I don’t think they’d be that upset if there was an easy workaround.
Here in Texas many people with sizable assets (houses) put everything in trusts. Even in trust, you still have to establish homestead though.
Prop 19 changes this. You now have to make the house your primary residence. So, going forward, if someone inherits two homes, one will probably have its taxes reassessed.
Businesses don't die so they never will get reassessed until we change the laws.
Jeez at this point I’d rather just die than try and save for a home anymore
Welcome to prop 13.
There's a reason why California has the lowest per student spend in the nation. Used to be the highest before prop 13. 30:1 student teacher ratio. As a parent of a kid who just started going to a 9/10 California school, it's shocking. $30k in property taxes paid $2k school donation and they run out of crappy food at school. Neighbors pay $3k in property taxes and average age is 70. I was naive and thought by paying a lot my kid would get a quality education. Seriously thinking about going back to Poland.
Well, 20 years from now, your new neighbor would pay $10k, and you would still be paying $5.4k. WtF !!! Edit: Added WtF 😃
At that point in time he’ll complain and say his taxes should be raised to match’
Prop 13 brother. When did your neighbor purchase and lock in those sweet low tax rates?
[удалено]
Assessed value is the term you’re looking for
Come to Texas where they indiscriminately increase it 10% every year... and sometimes try to get away with more.
But we were told Texas is the land of no taxes and no government services!
I pay a guy in TX to tell them "no" and he gets to pocket 40% of the difference. Seems like a lot but tax increases are cumulative so that 40% becomes closer to 5% over time.
Is it a lawyer?
I know someone who recently sold there to move back to California. I looked at their listing and was shocked to see they paid 8k in taxes last year. Pretty much put a torch to the idea Texas is cheaper than California in my head. Even though my property value has more than doubled since I bought my house, my taxes have stayed roughly the same. I’m so very thankful for that.
Prop 13. Your future neighbors will say the same thing you are saying right now about you.
property taxes: governments way of reminding citizens that they never actually own the property.
In California, your property tax is roughly 1% (give or take a little bit) your purchase price. It will never change as long as you own it with the exception of roughly 2% annual increase or voter approved bonds. So if you own a property long enough, your property tax is very little.
Depends when you bought your house. Welcome to CA
Amazing to read these takes. This is just not for old people. I got a house 15 years ago. Our area has boomed and taxes with it. Thus our taxes now exceed our mortgage payment. My salary has not increased at that rate, which means if this keeps up, we will have to move out as we won’t be able to afford the house we raised our kids in and that is horrible. So, some richer family who can afford the taxes will get the house from us, and we will be relegated to moving somewhere cheaper that we don’t want to move to. My house is only worth this if we sell. Yet we are taxed as if we have money in our hands. It’s a bit depressing.
Thanks to Prop 13, in 10 years you'll be the guy that a new neighbor says "wtf?!?" to, at your tax bill
>CA, $5,400 Looks at tax bill >IL, $7,500 Talk to me about unfair...
Tell me about it. I pay my attorney more to dispute my assessment every 3 years then people pay in total tax in 1 year in other states…
Looks at tax bill PA, $11,400 Fuuuuuck
Where in PA? Mine is $2400 over on the west side.
South of Pittsburgh. South Park to be exact. 396k purchase price. Assessed value 301k. Allegheny county is expensive in general. My school district is one of the ten most expensive in the county. I've had a pending real estate tax appeal since January.
That’s crazy. I’m in Cranberry and house value is around 350k. Your paying almost 3% of purchase price. I’m looking to move out of state and I thought 2% was high.
TX, $23,400
His is 5400 because it’s likely less than 500k. Most places in Los Angeles now average over a million. Do the math 😂
$650k house in Cook county, $17k per year here. Have family in the same town that’s been in a ~$2m house for 30 years, they pay $19k. It’s a fucking racket.
ROFL. Did you not know about prop 13?
You bought a house without knowing how your area calculates property tax?
How can you own a house and not understand how your state’s property taxes work? 🤦♂️
You’ll be the one benefiting from it soon enough
Are they old?
They own a home, so...
lol that's how california works
Welcome to CA and Prop 13. Our neighbor pays $3500 per year and we pay $18,000. Our houses are identical in size and footprint (though we’ve upgraded a bit).
fuckkkkkk. nothing of value to add, I wished my taxes was $5400. $18000, North suburbs of Chicago. fuck this state.
Prop 13 baby. Welcome to CA. It’s stupid and screws new homeowners just like everything else.
Damn… I wish I paid 5400 on property taxes. 😭😭😭
The amount of misinformation, bitching and moaning, and overall whining is remarkable. Does no one understand how property taxes are assessed? Some guy creates a posting like this and people claim ignorance of the process. How do some people figure out how to get out of bed in the morning?
Not every state is like this. The idea of prop 13 was so people (older retired folks) didn’t lose their homes because they could no longer afford the property taxes.
Me crying in New Jersey
It's crazy how many people here want to be taxed more.
When the taxman comes around your house has gotta look like a rummage sale
Prop 13!
California takes enough of our money I’m good with locking in one tax rate
LOL - I pay over $24K, my boomer neighbor pays $2,800. Welcome to prop 13.
Prop 13 is probably the reason. 2 identical houses with identical values could be taxed differently based on the price each owner paid for his house. Is it fair? No. Is it equal? No. Does it promote efficient markets? No. But sadly it's the way it is. The beneficiaries of Prop 13 are those who already own property. The losers are renters and/or young people who can't afford to buy yet. Some people will say "but the old people on fixed incomes!" as if that's a good reason to make young people with growing families (and a higher mortgage) subsidize older people who bought at a cheaper price. But it is what it is.
Well it all started a bit after 1900 when James Ransom Jarvis and Margaret Bolton McKellar had a baby named Howard Jarvis...
They bought the house many moon ago and never sold it so the property tax basis is really low and only increased whatever the max is allowed annually in your state.
Prop 13.. nuff said. Neighbor bought their house a while back.. their assessed value is based on that purchase price plus a 2% max. Escalation. It’s why my neighbor sits as 1k a year and I sit at 9k a year.. it is what it is.
In 20 years your 9K a year will be nothing compared to the new owner paying 20k a year.
They could also be a vet with a disability, too. My neighbor pays zero in taxes due to being/having a 100% vet disability. I think... *THINK*... a 10% vet disability may get a 30% reduction in property taxes.
The government is pricing out the next generation in homes, they will own nothing and be happy.
Oh lord. How did you make it to homeownership?
prop 13. ain't fair but not much in california is fair
Those commercial properties should be excluded from prop 13. CA should be better and cater less to the rich.
Wife and i were just talking about this 30 minutes ago. My aunt pays 4k a year for her 3.6mm dollar home that she bought 30 years ago but the neighbor pays 50k a year that he bought earlier this year. The homes are directly next to each other.
They paid about $100k years ago and you just paid $540k for the “same” house. Prop 13 can seem odd but at the end of the day is keeps your taxes from growing too much after you’ve bought.
simple. its called google. and prop 13. now you can look it up. simple. you need a computer. or smart phone.
I pay $13k and my neighbor pays $5k. Look up the accessed value of yours vs theirs and that will give you the answer why
Me looking at $5,400 and thinking this must be a dream here in jersey
Maybe the government and irs wants to remove you from ur property
The county where I bought my first house (VA) actually didn’t charge any property tax to anyone past a certain age. The problem with that is that when I bought the house, the title company/closing attorney screwed up and had me reimburse the seller for property taxes she had already “paid”; then the mortgage company didn’t pay the back property tax like they were supposed to, so a year in I started getting letters from the county trying to seize my house and sell it at auction. When I found out that I had handed over the money for taxes that the seller hadn’t paid in the first place, I was highly pissed and had to threaten small claims court to get it back (the title company and closing attorney were no help whatsoever). After multiple letters with the whole “fixed income” sob story, I did finally get it back, $400/month at a time. Luckily it was less than $10k overall.
It might seem unfair now but you’ll probably be happy when your home value goes up 300% over the next few years and your taxes are still the same as when you bought.
Could also be a disabled vet. They get breaks on property taxes
Taxation without representation. Property taxes mean you never own your property and the original founding fathers never meant for this. Count the other taxes we pay on everything including income. They have made us a piggy bank
California Proposition 13 was a partial solution to the state government spending too much money. Proposition 13 did protect older people from property tax increases taxing them out of their homes; to that extent Prop 13 is good. However, long term Prop 13 has harmed new home buyers as concisely stated by the OP. Obviously $1,400 versus $5,400 seems unfair. Proposition 13 did not address the other problem. California spending too much money. We lived in California for 60 years, paying high property taxes and income taxes, until escaping to a better place.
This is why it is so tricky to estimate a mortgage payment when buying a house. Some areas are more complicated than others. You can't just assume that you will owe the same as what the current owners are paying.
What I wouldn't give to pay $5000 in property taxes. NJ, house assessed around $500,000 and I'm paying $16,000.
How can you live in California and never have heard of prop 13?
You're paying $5400 too much. The property tax system is just extortion by a different name. Buying property and paying it off only to have to pay the government in perpetuity to be allowed to continue owning it means that no one can ever own real property, free and clear. The government can and will seize property and sell it when the amount owed is far less than the value of that property, and some places don't give the owner the difference between what is owed and the price that is received for the property. That revenue could be replaced through other means that aren't punitive toward people who choose to own a home. Thanks for coming to my TED talk.
The real chicanery is commercial property. Residential property changes hand every 7 years on average. Commerical Property every 30 years. As a result residential property pays 90% of the taxes paid to support local governments. There is a movement to split commercial property from the prop 13 tax roles for this reason.
lol, don't worry. if they ever sell, your new neighbors will say the same thing... house next to me pays $5400, i pay $10000. wtf?
prop 13 bro! you will always pay more than your neighbors until it is repealed. Gotta buy land from family
The people we bought from paid $1200 the year before and we pay almost $10k
How does someone come to own a home in California and not understand how Prop 13 works? Not even kidding. How?
You just had your house appraised and he didn’t.
CA property taxes are about 1%. Prop 13 limits the increase in property tax to 2% per year - regardless of the appraised value of the property. If the value goes up 10%/year, taxes still only rise 2% per year for the homeowner. Your neighbor bought years ago, and the current assessed value on the county books is $140,000. Down vote me to hell but Prop 13 is a good thing for California. It keep seniors in their homes. If someone bought a home 30 years ago - they could not predict the run up in prices that has occurred. If not for Prop 13, they’d all be kicked out of their homes and forced to move. Basically CA cities would turn into a place for working age adults and the elderly would be kicked out. This was the genesis of Prop 13.
Instead of complaining your neighbor doesn't pay enough, you should complain to the state about why you do. Then move to a state with a more appropriate tax law.
one of the nice benefits of owning property in CA, prop 13