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You're right; it was about ANYONE who owned a home in CA then, not just those on a fixed income. My parents were in their 40s when it passed, and they and all their neighbors were appalled at how much their property taxes were increasing yearly. They could not predict the increases from year to year and it frightened everyone, not just "grandma." That was its big selling point--property tax predictability--and why so many homeowners voted for it.
Opening your tax bill was a game of chance...
Just how much would your bill was anyone's guess.
This was the time of double digit tax increases... it was also the decade of gas lines, energy price spikes... etc.
I own a half dozen rental units in the Bay Area, and I have benefited from the Prop 13 caps on yearly tax increases. My tenants have benefited as well - they are very long-term tenants and I have a great relationship with them. There is no animosity as far as I can tell. They pay their rent on time. When every anything needs fixing, I fix it right away.
Let's say for sake of argument that the Prop 13 caps on rental property are done away with. My taxes will go up. I will pass every dollar of that tax increase along to my tenants. In fact, I'll put it as a separate line item: I'll have their regular rent, then add in a post-Prop 13 surcharge.
I own a half dozen rental units in the Bay Area, and I have benefited from the Prop 13 caps on yearly tax increases. My tenants have benefited as well - they are very long-term tenants and I have a great relationship with them. There is no animosity as far as I can tell. They pay their rent on time. When every anything needs fixing, I fix it right away.
Let's say for sake of argument that the Prop 13 caps on rental property are done away with. My taxes will go up. I will pass every dollar of that tax increase along to my tenants. In fact, I'll put it as a separate line item: I'll have their regular rent, then add in a post-Prop 13 surcharge.
Your assertion strikes me as kind of arrogant, you'll just pass every dollar on, just magically? Are you such a benevolent landlord that you are cutting your renters a break now, is this charity? Are you saying you don't charge market rates today? Is that because you are so kind and generous or is there more to the story?
Am I to understand if taxes go up, market rules mean nothing, you'll just raise the rent, by decree because you want more money?
As stated before, why not pass it on right now! After all, with the wave of a hand, it seems you presuppose that you can just magically raise the rent any time you want and demand whatever price you want. Market prices mean nothing?
The winds of change are coming and a Democrat super majority means it will happen in the next few years or so. There are already a number of draft proposals around Sacramento. We already know that in the end, the state will be better off by limiting the tax benefit to owner occupied residences only.
Your assumption regarding your control over rental prices comes across as presumptive. That attitude does more to spread the winds of change more than any advertising a PAC could buy. This one will be a good anecdote.
Last edited by GoldenZephyr; 12-01-2013 at 08:19 PM..
I own a half dozen rental units in the Bay Area, and I have benefited from the Prop 13 caps on yearly tax increases. My tenants have benefited as well - they are very long-term tenants and I have a great relationship with them. There is no animosity as far as I can tell. They pay their rent on time. When every anything needs fixing, I fix it right away.
Let's say for sake of argument that the Prop 13 caps on rental property are done away with. My taxes will go up. I will pass every dollar of that tax increase along to my tenants. In fact, I'll put it as a separate line item: I'll have their regular rent, then add in a post-Prop 13 surcharge.
Your political bias is shining through.
Higher taxes on investment properties will result in lower prices of properties and thus many renters will now be able to afford a home. Also, many out-of-staters who currently would LOVE to move to California but are turned off by high property prices will now be able to be home owners. I personally would love to move to California but the investors have been buying up so many properties that it has become too pricey due to all the competition/bids.
If rents get too high then home ownership will become more attractive, especially as prices drop slightly. Also, you'll face competition from other landlords and investors so you can't just charge based on anger. It'll have to be market-based. I would imagine rents will go up some, though. I doubt it will be more than 1 or 2 percent though (if that.) It's not like your taxes on the investment properties will soar by 5% or anything like that. Plus there's many other costs associated with properties besides property taxes and the note. There's insurance, upkeep, etc. I should know, I own several properties in Florida, one in Seattle, and one in Baton Rouge.
The taxes become part of the market equation for all landlords and tenets. Someone has to pay the taxes and normally that is the person renting the place. Correct that the market controls the price one can ask for a rental, but when all building owners are facing the same problem then the market shares the problem. Increased taxes are bad for all those involved.
The deal is that an income property has to provide an income. Costs do not come out of the owners pocket. The owner holds all the risk. Why should they not be paid a reward for taking on that risk.
As far as renters becoming home owners that does not always happen. You have lots of people that will never own a home.
I agree that it's not perfect. No solution is perfect. Perfect would be zero taxes and full amenities provided.
Here in Louisiana there's a high homestead exemption ($85k) so in my mind the renters do indirectly pay more relative to income but if you're going to tax property it makes more sense to tax the primary residence less than investor properties. That's just the way it is or at least the way it should be.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,557,056 times
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Quote:
Originally Posted by GoldenZephyr
Your assertion strikes me as kind of arrogant, you'll just pass every dollar on, just magically? Are you such a benevolent landlord that you are cutting your renters a break now, is this charity? Are you saying you don't charge market rates today? Is that because you are so kind and generous or is there more to the story?
Am I to understand if taxes go up, market rules mean nothing, you'll just raise the rent, by decree because you want more money?
As stated before, why not pass it on right now! After all, with the wave of a hand, it seems you presuppose that you can just magically raise the rent any time you want and demand whatever price you want. Market prices mean nothing?
The winds of change are coming and a Democrat super majority means it will happen in the next few years or so. There are already a number of draft proposals around Sacramento. We already know that in the end, the state will be better off by limiting the tax benefit to owner occupied residences only.
Your assumption regarding your control over rental prices comes across as presumptive. That attitude does more to spread the winds of change more than any advertising a PAC could buy. This one will be a good anecdote.
Just as you paint this poster as arrogant, I could easily post you as being quite pompous in your posts too. You make it seem like every landlord is a money grubbing person out to screw everyone over. The poster said he has kept rents fair and keeps the properties in good shape thus providing a good place to live. If he didn't provide fair exchange they would be vacant. Many here have posted they have kept rents below market as they have long time tenants and they and the tenants actually like each other. On my rentals my rents were kept a little below market and always in great shape. My tenants often invited me over for bbq's and card games.
Your constant mention of how landlords have this false idea they can raise rents whenever seems a bit shortsighted. I agree market dictates the rent, but if landlords all have expenses go up, they will tend to try to raise rents. If they can't and it stops making sense, they will sell the properties. If there is less available rentals, rents could easily go up as market demands increase for them. These are market factors too.
Yes it may make more homes available to those who can purchase them, but what about those with lower incomes who still can't afford to buy. Now you've made life worse for them because they have to pay more for rent. Or maybe they don't count?
A change of the magnitude limiting Prop 13 to owner occupied single family homes would have far reaching consequences.
I'm friends with several farm families in Northern California and a couple of years ago the discussion with the grandfather was how he had almost lost the farm in 1978 because of double digit tax hikes...
In his case... Prop 13 saved the farm by rolling back the assessment to 1975 and limiting annual increases at 2%.
Same would go for shop owners I know in the city... they live above their shops and I can only imagine the problems implementation would bring.
California has been trying to stem the flow of jobs to other States and overseas... one of the pluses touted by the State is predictable taxes...
I just don't see how this will be a positive change.
Cities and counties such as San Francisco are very aggressive in tracking ownership changes on commercial entities...
I also know a number of Mom and Pop landlords that might only own one rental or as many as 3 or 4 or one fourplex...
Many have not raised rents in years and as a practice only raise rents when tenants turnover...
A women I work with rents a small 2 bedroom home in the East Bay for $750 a month... the same rent she paid in 2001 when she moved in... the 85 year old couple that own the home are happy to have her and she is glad to be there...
They bought the home in 1984 and the taxes are very low... I imagine the home would rent easily for $1500 and if the taxes doubled or tripled my friends rent would have to go up or she would need to find somewhere else to rent if the home was no longer viable as a rental.
Unpredictable taxes would be just another reason for business to look elsewhere.
Remember... California already has just about every tax and is not a low tax State... Oregon has no State Sales Tax and Washington and Nevada no State Income Tax.
... Am I to understand if taxes go up, market rules mean nothing, you'll just raise the rent, by decree because you want more money?
Nope. It is because the State wants more money - or perhaps because the State wants to punish a certain class of people.
Quote:
Originally Posted by GoldenZephyr
... We already know that in the end, the state will be better off by limiting the tax benefit to owner occupied residences only.
Speaking of arrogance, is that the "Royal We" you are referring to? And which state are you referring to that would be better off? The issue isn't the State. The issue is individual people. And please cite what research you are referring to that calculates this better-off-ness to which you refer -- or are you just making this up at the keyboard?
Quote:
Originally Posted by GoldenZephyr
... Your assumption regarding your control over rental prices comes across as presumptive. That attitude does more to spread the winds of change more than any advertising a PAC could buy. This one will be a good anecdote.
As with the Unaffordable Care Act, there are some unintended consequences to willy-nilly using the tax code as a vehicle for social engineering. Legislators are neither that smart nor that free of influence.
Nope. My understanding of economics is shining through. You, on the other hand... well...
Quote:
Originally Posted by things and stuff
... Higher taxes on investment properties will result in lower prices of properties and thus many renters will now be able to afford a home.
Anyone who did well in Econ 101 remembers that the statutory burden of the tax (that is, who pays the tax to the government, in this case the landlord) has NO EFFECT on who actually bears the BURDEN of the tax - it depends on characteristics of supply & demand.
You assume the price elasticity of demand for rental housing looks something like the following where the burden falls mostly on the landlord and very little on the renter:
Perhaps this is true in Louisiana where you live, but it is not true in most SF Bay Area communities where finding a unit to rent is almost hand-to-hand combat.
In the SF Bay Area, the elasticity of demand is such that it looks much more like the following. Note where the burden of the higher tax falls - it falls mostly on the renter through higher prices:
Quote:
Originally Posted by things and stuff
... Also, many out-of-staters who currently would LOVE to move to California but are turned off by high property prices...
I don't understand; you say this as if it were a bad thing.
Quote:
Originally Posted by things and stuff
... will now be able to be home owners.
Yeah. Right. Good luck with that.
Quote:
Originally Posted by things and stuff
... I personally would love to move to California but the investors have been buying up so many properties that it has become too pricey due to all the competition/bids.
I feel for you. I have compassion. Too bad you don't find the price/value to be worth the move.
Oh -- I also think everyone ought to be able to afford a Porsche.
Quote:
Originally Posted by things and stuff
... Also, you'll face competition from other landlords and investors so you can't just charge based on anger.
I'm not angry in the least. I'm quite happy.
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