Property values compared to Texas - What am I missing? (San Jose: lawyer, home builder)

[EscapeCalifornia]

Originally Posted by timtemtym

Texas has no income tax and a good chunk of the state is funded off of property taxes. It's much better to be a renter in TX! My parents had a nice four bedroom house with a pool valued at around 120k in a nice, suburban area, their property taxes were about 3200 a year! They are high earners and would likely pay that in income tax to the state living in a place like California.

And they'd be paying $5000-6000/yr in tax on a similar house in a similar neighborhood in SoCal.

[JohnSoCal]

Originally Posted by EscapeCalifornia

And they'd be paying $5000-6000/yr in tax on a similar house in a similar neighborhood in SoCal.

Depends where in SoCal. I pay $3200 /yr. for an upscale 2800 sq. ft. 4 BR. 3BA. 3 car garage with a 42 X 21 swimming pool plus spa. You would pay a lot more than $120K for a comparable home in Texas.

[CA4Now]

Originally Posted by JohnSoCal

Depends where in SoCal. I pay $3200 /yr. for an upscale 2800 sq. ft. 4 BR. 3BA. 3 car garage with a 42 X 21 swimming pool plus spa. You would pay a lot more than $120K for a comparable home in Texas.

We paid double what you're paying in property taxes for a slightly smaller home, one fewer bedroom, 2 car garage, pool w/ spa. Purchased in early 1990s when property taxes were around $2,700...but with each major remodel came an increase in property assessment.

So, even with Prop 13, what owners do to the home is as important as when they bought it.

[JohnSoCal]

Originally Posted by CA4Now

We paid double what you're paying in property taxes for a slightly smaller home, one fewer bedroom, 2 car garage, pool w/ spa. Purchased in early 1990s when property taxes were around $2,700...but with each major remodel came an increase in property assessment.

So, even with Prop 13, what owners do to the home is as important as when they bought it.

We bought our home brand new in 2002. We added $140,000 in upgrades and improvements. However the only ones that affected the assessed value were those requiring a building permit like the swimming pool and our huge 55 X 15 patio cover. The upgrades weren't added to the assessed value because we paid cash for them and did not put them on the mortgage.

[CA4Now]

Originally Posted by JohnSoCal

We added $140,000 in upgrades and improvements. However the only ones that affected the assessed value were those requiring a building permit like the swimming pool and our huge 55 X 15 patio cover. The upgrades weren't added to the assessed value because we paid cash for them and did not put them on the mortgage.

How it's financed has nothing to do with assessment of property (we also paid cash for each of ours). If the owner's upgrade requires a permit, the estimated value of the completed remodel will be added to the property value. Once the contractor turns in the permit, the owner receives a supplemental property assessment in the mail.

What happens when you sell your house if you don't have permits for your upgrades?

[JohnSoCal]

Originally Posted by CA4Now

How it's financed has nothing to do with assessment of property (we also paid cash for each of ours). If the owner's upgrade requires a permit, the estimated value of the completed remodel will be added to the property value. Once the contractor turns in the permit, the owner receives a supplemental property assessment in the mail.

What happens when you sell your house if you don't have permits for your upgrades?

Absolutely untrue. If you buy a brand new home and add builder's upgrades like granite counter tops, ceiling fans, etc., etc. the cost will not be included in the assessed value if they are not included in the mortgage. The builder upgrades do not require permits. Have you ever bought a new home? If so how many permits did you have to get to add the upgrades? I am not talking about additions done after the house is finished but upgrades added as the house is built. Anything added after escrow closes will add to the assessed value if it requires a permit. I have bought and sold 8 new homes in California so have been through this many times. Let me perfectly clear that I am talking about buider's upgrades added by the builder while the house is being built, NOT owner's upgrades added at some later date.

[EscapeCalifornia]

Originally Posted by JohnSoCal

Absolutely untrue. If you buy a brand new home and add builder's upgrades like granite counter tops, ceiling fans, etc., etc. the cost will not be included in the assessed value if they are not included in the mortgage. The builder upgrades do not require permits. Have you ever bought a new home? If so how many permits did you have to get to add the upgrades? I am not talking about additions done after the house is finished but upgrades added as the house is built. Anything added after escrow closes will add to the assessed value if it requires a permit. I have bought and sold 8 new homes in California so have been through this many times. Let me perfectly clear that I am talking about buider's upgrades added by the builder while the house is being built, NOT owner's upgrades added at some later date.

So those upgrades aren't factored in the sales price which becomes your assessed value?

[JohnSoCal]

Originally Posted by EscapeCalifornia

So those upgrades aren't factored in the sales price which becomes your assessed value?

Not if you pay for them separately and don't put them on the mortgage. The reported sales price for the home for tax purposes was the base price of the home without the $40,000 extra in upgrades.

[EscapeCalifornia]

Originally Posted by JohnSoCal

Not if you pay for them separately and don't put them on the mortgage. The reported sales price for the home for tax purposes was the base price of the home without the $40,000 extra in upgrades.

I'm surprised the tax man hasn't closed that loophole yet.

[JohnSoCal]

Originally Posted by EscapeCalifornia

I'm surprised the tax man hasn't closed that loophole yet.

It is a pretty hard loophole to close as there is no paper trail that is a public record.