Love/Hate for California (Palm Springs, Monterey: renting, homes, hippest)
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Prop 13 is one of the only protections property owners have over the last 30 years... and even then the taxes are plenty.
Prop 13 requires a 2/3 or in the case of school bonds... 55% vote in favor to raise taxes and this is a good thing.
Well, to be honest, I do not know the ins and outs of Prop. 13, and it is, I am sure, a very old, entrenched debate. However, I zillowed a house in Santa Cruz last week that is listed for $875k with annual property taxes of $1000. I pay $2200 on my house I purchased years ago for $205k. I have to wonder if the low tax liability allowed the housing to inflate unmercifully while leaving the state and local governments scratching for cash. That is all I can share, and I am glad to be educated.
Well, to be honest, I do not know the ins and outs of Prop. 13, and it is, I am sure, a very old, entrenched debate. However, I zillowed a house in Santa Cruz last week that is listed for $875k with annual property taxes of $1000. I pay $2200 on my house I purchased years ago for $205k. I have to wonder if the low tax liability allowed the housing to inflate unmercifully while leaving the state and local governments scratching for cash. That is all I can share, and I am glad to be educated.
The debate over Prop 13 is never ending because it's about money.
Part of the reason for Prop 13 success in addition to the rapid tax increases of the 70's around the time of the oil shortages was school funding.
Changes Sacramento made to School funding resulted in affluent areas sending education money to less affluent... it was one thing to pay high local property tax and have top rate schools... quite something else to pay high property tax and have part of the money leave the district.
Since Property is re-evaluated upon transfer... some argue that Prop 13 tempered home values because the higher the sales price the higher the tax.
As someone that bought at the peak of the market for 600k... I pay nearly $750 a month property tax for a un-remodeled 1700 square foot rancher in the Bay Area... Prop 13 does limit year to year increase to 2%... so even though I'm paying many times what the seller paid... I hope to get a break 20 years down the road when new buyers are willing to pay even higher inflated prices... My tax rate in nearly 1.5% because the voters here pass nearly every special assessment that comes along.
High Property Taxes drive people from their homes... all depends on your point of view if this is good or bad.
The Zillow property would have had to be worth less than 50k 30 years ago to have a Prop 13 1% Property Tax of $1000. Part of the reason could also be not all areas have as many local assessments.
My parents own a small lot they paid $800 for in 1976 and the yearly taxes are almost what they paid for it at $600
Last edited by Ultrarunner; 01-10-2010 at 11:51 PM..
Reason: Added Omited Info
The Zillow property would have had to be almost worthless 30 years ago to have total Property Tax of $1000. My parents own a small lot they paid $800 for in 1976 and the yearly taxes are almost what they paid for it at $600
I just looked up my parents' house on Zillow and it shows their 2009 tax bill as $900. They bought it new in 1974 for $44k.
The debate over Prop 13 is never ending because it's about money.
Part of the reason for Prop 13 success in addition to the rapid tax increases of the 70's around the time of the oil shortages was school funding.
Changes Sacramento made to School funding resulted in affluent areas sending education money to less affluent... it was one thing to pay high local property tax and have top rate schools... quite something else to pay high property tax and have part of the money leave the district.
Since Property is re-evaluated upon transfer... some argue that Prop 13 tempered home values because the higher the sales price the higher the tax.
As someone that bought at the peak of the market for 600k... I pay nearly $750 a month property tax for a un-remodeled 1700 square foot rancher in the Bay Area... Prop 13 does limit year to year increase to 2%... so even though I'm paying many times what the seller paid... I hope to get a break 20 years down the road when new buyers are willing to pay even higher inflated prices... My tax rate in nearly 1.5% because the voters here pass nearly every special assessment that comes along.
High Property Taxes drive people from their homes... all depends on your point of view if this is good or bad.
The Zillow property would have had to be almost worthless 30 years ago to have total Property Tax of $1000. My parents own a small lot they paid $800 for in 1976 and the yearly taxes are almost what they paid for it at $600
Thanks for the explanation. Funny thing is, that house in Santa Cruz looked fairly decent. Perhaps it was a custom build that the assessor never caugh up on. Or more likely, the Zillow data are in error.
Thanks for the explanation. Funny thing is, that house in Santa Cruz looked fairly decent. Perhaps it was a custom build that the assessor never caugh up on. Or more likely, the Zillow data are in error.
Hard to say... the property could be in an area that experienced above average appreciation... or, as you mentioned... the assessor never adjusted values to reflect improvements.
Could be a buying opportunity... the sellers are probably the original owners or at least have owned long enough to have retired the mortgage...
They could be in a position to finance for additional income in their golden years.
Prop 13 does distort the property market. My parents bought their last home in California in 1973 for 49K and the current tax bill is $1100/yr. They have made little improvements to the home in the last 15-20 yrs. My mother in law pays $1600/yr in tax on a home she bought in the early to mid sixties but she has added on and made fairly extensive changes, most more than 10 yrs ago. Neither my parents or my in laws could afford to pay the tax bill today if it was at market rate. I live in a home in NC that I purchased for 150K (more than 10 yrs ago) and I pay $3600 in property tax here in the Southeast. Without Prop 13 , both my parents and in laws would have to move to less expensive areas, placing two properties fit for young working families on the market. I'm happy they both can remain in their homes, but there would be a flood of property on the market if Prop 13 was removed and all of these senior citizens had to move. Prop 13 serves as an artificial impediment to the efficient use of property. Itbelieve it is even worse on the commercial side of things.
Prop 13 does distort the property market. My parents bought their last home in California in 1973 for 49K and the current tax bill is $1100/yr. They have made little improvements to the home in the last 15-20 yrs. My mother in law pays $1600/yr in tax on a home she bought in the early to mid sixties but she has added on and made fairly extensive changes, most more than 10 yrs ago. Neither my parents or my in laws could afford to pay the tax bill today if it was at market rate. I live in a home in NC that I purchased for 150K (more than 10 yrs ago) and I pay $3600 in property tax here in the Southeast. Without Prop 13 , both my parents and in laws would have to move to less expensive areas, placing two properties fit for young working families on the market. I'm happy they both can remain in their homes, but there would be a flood of property on the market if Prop 13 was removed and all of these senior citizens had to move. Prop 13 serves as an artificial impediment to the efficient use of property. Itbelieve it is even worse on the commercial side of things.
The goverment is all about protecting people... we have unemployment, disability, social security... these are all artificial...
Food, Shelter and Clothing are the essentials of life... Prop 13 does a tremendous job regarding Shelter by keeping taxes predictable and eliminates the fraud that existed in Assessor's offices prior to Prop 13.
Vehicle Taxes are based on the purchase price... my brother bought a 1968 Mustang 30 years ago... it has appreciated in value... so by that logic his fees should also increase
I believe it is efficient to provide a means to keep people in their homes... Prop 13 does this.
As for Commercial and Residential... the California Constitution prohibits a split tax roll...
Business is closing left and right... all we need is another incentive for business to leave or close...
Corporations are owned by shareholders... just about anyone with a retirement plan has a stake...
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