Eliminate Prop 13 tax breaks for Real Estate Investors (San Francisco, Sacramento: apartments, to rent)

[Ultrarunner]

Originally Posted by user_id

Due to inflation the length of ownership is relevant, over time property values will increase with inflation. Over the last 30 years real estate has appreciated faster than inflation and as a result you can can have people on the same block paying wildly different tax rates. That makes no sense, one's tax rate shouldn't be based on when they purchased their home.

Makes perfect sense...

Just like Sales tax paid on a car is based on the purchase price and Income Tax is based on income.

Why should a home be any different?

Tax should ALWAYS be based on the price paid for any goods or services

[CarawayDJ]

Originally Posted by user_id

So, like I said, you have a number of investment properties that you've owned for a long time yet you only mentioned the tax rate on your personal residence. You benefit financially from Prop 13 so naturally you're going to support it, its the American way.

The tax system is badly broken today in good part because of Prop 13. Schools are under funded and productivity taxes are too high all because of Prop 13. Prop 13 needs to be repealed.

Due to inflation the length of ownership is relevant, over time property values will increase with inflation. Over the last 30 years real estate has appreciated faster than inflation and as a result you can can have people on the same block paying wildly different tax rates. That makes no sense, one's tax rate shouldn't be based on when they purchased their home.

I hear what you are arguing, but don't find it based on political reality. That political reality being a solidly Democrat and liberal state. There is no chance at all that repealing Prop 13 would result in a meaningful lowering of any taxes elsewhere. That's not what blue states do. It's not in their DNA. There are too many "good ideas" they still need your money for.

I'd wager everything I own that if Prop 13 is repealed the only thing anyone will see is higher property taxes for those who were getting a break. Forget about any notion of productivity taxes being lowered. It won't happen.

I have no idea how or why schools can be under funded in CA. It's not like CA is one of the low tax burden states. Maybe people should ask that question first. Besides, reduced tax rates due to Prop 13 should not be confused with low taxes in absolute $$$. Those "suppressed" tax bills resulting from Prop 13 still bring in more revenue per house than places where the home values are significantly lower. So how on earth can those places fund schools, maintain roads, etc.? Maybe states like SC have dirt roads and no schools at all?

[Tulemutt]

Originally Posted by Ultrarunner

Some cities like Detroit have hundreds of them just looking for someone to buy and to love... Detroit is one of the most affordable cities in the country and homes go begging.




Again, Prop 13 benifits every property owner and would be property owner... just like rent control does for renters.

Although I am sympathetic to the intent of Prop 13, I do not agree with many of your points.
Detroit is NOT an affordable city if there are no good jobs, no reliable quality services, no personal security, etc. Those are not negotiable values.

And Prop 13 does NOT benefit every property owner if it reduces the state's ability to finance ALL of the community's needs.

IMO, Prop 13 should be replaced with a needs-based deduction system that takes into account an owner's financial status and retirement, as well as longevity of ownership - BUT ONLY for owner-occupied primary residence. Income / investment property is a business. Pure and simple.

[user_id]

Originally Posted by Ultrarunner

Every property owner in California benefits from Prop 13...

No they don't, with Prop 13 some property owners will have very low property taxes while others will have much higher property taxes. Its not uncommon for people on the same block to have wildly different tax rates, for example, $1,000, $2,000 and $4,000 for homes of roughly the same value. That makes no sense, a residents tax burden should have no relation to when they purchased their home.

Originally Posted by Ultrarunner

You want higher Property Taxes... eliminate Income Tax like Nevada or Sales Tax like Oregon...

Taxpayers in California are Taxed Enought Already.

The elimination of income tax, at least for earned income, would be great. And, as I said before, Prop 13 should be phased out and income taxes lowered at the same time to make it overall tax neutral. No increase in taxes just a shift in how the taxes are collected.

This would create a more stable and fair tax system.

[Ultrarunner]

Your missing the point...

Prop 13 applies equally to all taxable real estate in California because taxes require voter approval to increase, annual inflation factor is 2% and the Assessor is left out of the equation for the most part...

I never want to return to a system that depends on someone's opinion of what my property is worth and if I disagree, the appeal process can, by law take 2 years to be heard and taxes as billed must be paid in full and the appeal requires a filing fee even when the value is determined to be too high...

Prop 13 succeeded against all odds and was dismissed by Sacramento.

Prop 13 works and in the case of schools, the voters voted to reduce the 2/3 requirement to 55%... exactly how it is supposed to work... government is not free to raise taxes with voter approval...

If the voters don't support an increase it can be argued the reason is not compelling.

As to the reference to Detroit...

When I bought my first home in the lawless part of East Oakland years ago it was cheap by virtue of two things... location and condition.

A Brick home with a basement in Detroit selling for 5k is accordingly priced because of location and condition...

Everyone, even my grandparents all tried to explain the error of my ways buying my first home out in the Avenues of East Oakland... it was what I could afford and while all my friends were buying cars and renting in nice areas... I owned my home outright with no mortgage and reasonable taxes...

[Tulemutt]

Price alone doesn't define affordability. Detroit does not "afford" the opportunity or security necessary to move there just because abandoned homes are nearly free. On the other hand, there are many places - such as Vallejo - and parts of Oakland in the past - that took a dive, but are well positioned for revival.

[Ultrarunner]

True... just a matter of timing, a little luck and having a vision.

In my case it was pure pragmatism... I just wanted to own and the only way I could do that was to look at the least expensive homes in the region and at that time... it was East Oakland out in the avenues.

After 10 years of ownership the home was worth about double the price I paid plus all of my improvements... in 2008 the home was maybe worth what I had in it... MAYBE because it is small.

Without Prop 13, my taxes would have been like a roller coaster... as more fools with easy credit started to buy the prices soared and then it was over... more than over when prices fell 50 to 80% and everyone to a person that bought from 2004 to 2007 or refied simply walked away...

I stayed the course and never raised my rent... my taxes continued to increase a lot because of voter approved special assessments...

Rental Property is already subject to a Gross Receipts Tax and Rent Control... if non owner occupied homes are targeted for tax increases it would leave a lot of renters in just as much of a bind as owners...

Oakland has rent control which takes into account property tax...

[Ultrarunner]

All this discussion does not take into account that a two tier Property Tax is unconstitutional in California... split rolls are not permitted.

As to the part about ownership changes... think about how hard that would be to enforce on a practical scale if not using transfer as the basis?

Corporate Property is an asset of the Corporation and belongs to the shareholders... shares of public companies trade every business day... even private company shares change hands... death of a partner, divorce, retirement etc.

The last thing California needs is another bureaucracy...

We had the perfect remedy in place... the Homeowner Deduction and our elected officials simply refused to grant the governed relief by a simple indexing to inflation...

I know it's been 36 years since Prop 13 became law... I think, if anything, Sacramento is less responsive today and thankfully Prop 13 is there to hold the line.

[CA4Now]

Originally Posted by Ultrarunner

Without Prop 13, (property) taxes would have been like a roller coaster...

And they were before Prop 13--which people forget--and that unpredictability is what caused the voter revolt in 1978.

[Ultrarunner]

Even though I was too young at the time... I remember my Dad sometimes wouldn't open the Property Tax bill for days and I will never forget the year of double digit increase...

One of our closest neighbors was retiring from Pacific Bell and that tax bill put him over the edge... they sold and moved to Georgia and lived happily ever after.

Out of control spending and tax hikes are something no one that lived through it will forget...

On the plus side... both my teacher and my uncle were promised and received rent reductions when Prop 13 passed...