Public Employee Unions want to change Prop. 13 so busness property tax goes up & up more every year. (Sacramento: rentals, eviction)

[CA4Now]

Originally Posted by freemkt

business real property is held in corporate form and buyers buy the corporation, not specifically the property. Since the corporation owns the property indefinitely, the property is never reassessed. That, at least, is my understanding of the loophole.

Yes. Thank you for the succinct explanation.

[CA4Now]

Originally Posted by freemkt

Why was there no desire to protect renters?

The general belief is that renters will eventually become buyers.

[majoun]

Originally Posted by freemkt

Why was there no desire to protect renters?

Was it just coincidence that Howard Jarvis was a landlord?

A landlord, and a lobbyist for the Los Angeles Apartment Owners Association.

He played the crony capitalism game and made out nicely.

(It is a bit surprising that Jarvis lived in West Hollywood ; you'd expect him to have lived in Orange County or Glendale.)

[2sleepy]

Originally Posted by freemkt

Pays the same rate...on an artificially determined base.

A owns house worth $1M

B owns house worth $500K.

B pays more property tax than A.

So much for paying the same rate!

It is the same tax RATE, 1% plus any local assessments. That is what tax rate means. Are they paying the same tax? NO, and neither would they be paying the same tax in any place in the US. All property tax rates are calculated at a percent of value of either the purchase price (as in California) or of the appraised value (as is the case in Nevada). Let me try to make it real simple for you:

California: tax is calculated as a percent of purchase price and is not reappraised until the property changes ownership. So if you buy a house for $200,000 your tax is $2,000 a year when you buy it, and $2,000 twenty years later if you still own it.

Nevada: tax is calculated as a percent of appraised value and is adjusted every 5 years upon reappraisal. If you buy a house for $200,000 your tax is $2,000 a year. If twenty years later the house is worth $600,000 your property tax would be $6,000 if you still own it.

[2sleepy]

Originally Posted by freemkt

yes.

I am a meddling interloper who has never lived in California, but my understanding is that business real property is held in corporate form and buyers buy the corporation, not specifically the property.

Since the corporation owns the property indefinitely, the property is never reassessed.

That, at least, is my understanding of the loophole.

Property is reassessed to market value only when it is sold, but a sale is defined as a transfer of 50% or more to one owner. Big businesses now structure sales to multiple owners, so that no one buyer owns 50% at the time of the transfer. After the transaction is completed the remainder of the ownership in the property is transferred to the new owner but that still does not trigger reassessment. One proposal to stop this was to impose a 3 year rule, if 90% of the ownership of a business was transferred during that period it would trigger reassessment.

As far as renters - property tax is a very small part of the rent that you are paying, rents go up due to demand, not increases in property tax.

[2sleepy]

Originally Posted by freemkt

On average, rental properties have shorter holding periods than owner-occupied homes, i.e. rental properties are sold more often than owner-occupied homes.

Renters are heavily skewed toward the young and the poor.

For more than 30 years, landlords and renters have been subsidizing homeowners under Prop 13.

Taking apartment buildings out of Prop 13 would only exacerbate the subsidy to homeowners.

I never suggested taking apartment buildings out of prop 13, but honestly either way it won't affect your rent. Your rent is based on supply and demand, not the property tax rate.

[2sleepy]

Originally Posted by freemkt

BZZT. Apartment buildings with more than four units are classified and taxed as commercial property.

Renters got a bum deal from Prop 13, now you want to whack them again?

BZZT guess what Commercial property and residential property are taxed EXACTLY the same in California, some states have different tax rates and those are called "split roll states", but that does not apply to California BZZT BZZT BZZT

[majoun]

Originally Posted by 2sleepy

I never suggested taking apartment buildings out of prop 13, but honestly either way it won't affect your rent. Your rent is based on supply and demand, not the property tax rate.

Howard Jarvis sold Prop 13 to the California electorate by arguing the opposite.

[CA4Now]

Originally Posted by freemkt

it's a good thing only as long as California does not have split tax rolls. As soon as split rolls are enacted, requiring voter approval will be a bad thing...because you know how that is going to play out.

The so-called split-roll proposal to change Proposition 13 would require the regular reassessment of commercial properties while keeping tax protections for residences in place.
Support dwindles for changing Proposition 13 - LA Times

[Ultrarunner]

Originally Posted by freemkt

Prop 13:

homeowners = winners

renters = losers

Except as I have mentioned many times... I don't automatically raise rent... sometimes for years.

I value great tenants and low turnover...

What I do it evaluate my costs and margins... double digit tax increases as in the 1970's would most definitely shake things up AND... even under Rent Control... there are provisions for passing on hard costs such as taxes and government imposed fees... I am allowed to pass through 50% of the assessed Rent Board Fee to my tenants as a yearly line item... I have never done so...

Also... both my Uncle and my Grade School teacher were renters when Prop 13 passed... both were ecstatic to receive rent reductions that lasted the entire term of their tenancies...

Make no mistake... I do go to market when I have a vacancy... I just don't nickle and dime my good tenants.