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When I say rate, I mean tax burden. I understand how prop 13 works.
Then should a person receive a reduced service as they are paying a reduced rate? It is really easy to determine a value of a house the vast majority of the time. Just look at recent sales within 2 miles within a year and then divide the sale price by sq ft. Then everyone gets that sq ft value applied to their house. After that you can appeal.
Or just to a fixed payment for everyone in the state based on sq ft or bedrooms or get rid of property tax all together or a flat rate per zip code adjusted to sq ft of house based on sale prices. Many different ways to put in place a tax system that is equitable. Instead we have people paying 20k per year more than their neighbors for the same services when they live in the same house.
No, No, No...
It is easy to guess at the value based on comparable sales... that's all... it is still an opinion as Real Estate is unique and defined as such in the law... this is why Specific Performance happens if a seller backs out of a sale... each is unique.
Think about it... the homes that are used for comparison are already sold... they are not available for sale... so someone looking to buy can only select from current offerings... not one that is sold and off the market.
It's just like butcher shop advertising hamburger at $1 a pound... doesn't mean a thing unless the meat is available for immediate sale.
There is a home I have tried to buy several time over the last few years... I offered a 100k over what it sold for... unfortunately, my offer came in the same day the seller had just accepted the lower offer...
On my street the homes across the street sell for a lot more because they have a nice view... I don't have a view and when I bought, even with it being listed and sold through a Real Estate Broker the Tax Man said it was not a fair market sale... he had to come out to verify I did NOT have a view...
Then the people at the end of the street appealed their assessment because trees grew and totally blocked their view...
The last thing I want to do is spend my life going from one appeal to the next...
As to services... again... the people I bought my home from were age 83 and 85 they have one child age 62 who lives in another state... many/most of my neighbors are the original residents... even the lady that was 102 years old... none have had children in school for 50+ years... yet they all paid a special 30 year assessment to build the school...
Public Education takes the lion share of the Property Tax dollars... someone in their home for 30 or 40 years isn't likely to have children in school... yet they still pay.
You may be on to something... eliminate the portion of the property tax bill going to public education if their are no school age children... this would greatly slash tax bills... some states already do this... my friends in Washington State live in a retirement zip code and pay NO school taxes and realize a huge savings on something they will never use.
My tax rate works out to about 1.7% with the .7% being basically fixed rate assessments for specifics...
Even Governor Brown who led the opposition to Prop 13 has publically stated it is settled law and time to move on.
It is easy to guess at the value based on comparable sales... that's all... it is still an opinion as Real Estate is unique and defined as such in the law... this is why Specific Performance happens if a seller backs out of a sale... each is unique.
Think about it... the homes that are used for comparison are already sold... they are not available for sale... so someone looking to buy can only select from current offerings... not one that is sold and off the market.
It's just like butcher shop advertising hamburger at $1 a pound... doesn't mean a thing unless the meat is available for immediate sale.
There is a home I have tried to buy several time over the last few years... I offered a 100k over what it sold for... unfortunately, my offer came in the same day the seller had just accepted the lower offer...
On my street the homes across the street sell for a lot more because they have a nice view... I don't have a view and when I bought, even with it being listed and sold through a Real Estate Broker the Tax Man said it was not a fair market sale... he had to come out to verify I did NOT have a view...
Then the people at the end of the street appealed their assessment because trees grew and totally blocked their view...
The last thing I want to do is spend my life going from one appeal to the next...
As to services... again... the people I bought my home from were age 83 and 85 they have one child age 62 who lives in another state... many/most of my neighbors are the original residents... even the lady that was 102 years old... none have had children in school for 50+ years... yet they all paid a special 30 year assessment to build the school...
Public Education takes the lion share of the Property Tax dollars... someone in their home for 30 or 40 years isn't likely to have children in school... yet they still pay.
You may be on to something... eliminate the portion of the property tax bill going to public education if their are no school age children... this would greatly slash tax bills... some states already do this... my friends in Washington State live in a retirement zip code and pay NO school taxes and realize a huge savings on something they will never use.
My tax rate works out to about 1.7% with the .7% being basically fixed rate assessments for specifics...
Even Governor Brown who led the opposition to Prop 13 has publically stated it is settled law and time to move on.
Your basically arguing that assessing value isn't 100% perfect so we should keep our current system that has no basis in assessed value and picks winners and loser and is the definition of inequitable tax system. We have dozens of better options to prop 13, but too many people benefit at the cost of a smaller minority so the system stays.
I'm a limited government, low tax and strong Liberty supporter and I'll call prop 13 out for what it really is, rent control for home owners.
Your basically arguing that assessing value isn't 100% perfect so we should keep our current system that has no basis in assessed value and picks winners and loser and is the definition of inequitable tax system. We have dozens of better options to prop 13, but too many people benefit at the cost of a smaller minority so the system stays.
You are right... many people benefit as in everyone that gets a property tax bill in California benefits...
Some people are just impatient and unwilling to wait...
They see Grandma and Grandpa paying $1200 a year property tax on a home they built 55 years ago and it troubles them... whereas I celebrate it knowing that the moment I bought the home my tax burden will not be $1200 per year, but it will be $8800.
I fully believe and intend to be the oldster on the block in 50 years with the low tax bill.
So how is this unfair???
When it was their turn to pay to build up the infrastructure... they did... now it is my turn and I willing accept.
I have no envy or malice towards people that have lived in their homes for decades... I celebrate them for making the neighborhood a place I am willing to pay $8800 property tax to live there.
Now here is an interesting twist you will have to follow me on...
In 2012 a home twice the size of mine and only 10 years old was sold as a foreclosure property... the new people bought in buyers market... they competed with 17 others to buy the foreclosure and they pay nearly the same property tax that I pay... they pay 10k and I pay $9400
How can this be.... I have a smaller house, I have been there a lot longer and my house is older and they pay less???
It's simple... they bought in a down market and paid Fair Market Value at the time and this is their basis going forward...
this should open the minds of people buying houses for speculation. that you should treat your house long term to take advantage of the lower property tax.
better yet, only buy during downturns or correction
Excellent strategy and one that was lost on many in the last bust...
You need to live somewhere and depending on wants and needs purchasing a home can be the answer.
Buying in a Buyer's market can can make it worthwhile of more worthwhile... there was a time when every city block in Oakland had at least one foreclosure and I can document homes that lost up to 80% in value...
I've posted about a home I sold for 255k that was sold the following year for 350k and then the bank sold it for 80k... it was the same home with 3 very different selling prices in the course of a couple of years.
Prop 13 allows you to lock in a base year just like a 30 year fixed rate mortgage lets you lock in a payment...
Predictability provides a sound foundation for decision...
The opposite would be taking out a variable that you know the interest rate "Could" double and then where would you be?
2011-12 was the buy opportunity of a generation...
Just remember that Real Estate has always been cyclical... I've seen several downturns and I'm sure I will see more... doubt I will see a 2011-12 rock bottom again.
But the 1% tax rate based on the value at purchase price can only go up a fixed amount so two different people in identical houses will be paying extremely different amounts in taxes based on when they purchased said house.
That is why I would rather prop 13 be gotten rid of and the rate lowered so everyone would be paying the same now lower rate on the actual value of the home.
The government shouldn't be kicking winners and losers.
Here is an example of why prop 13 isn't equitable
Look at it from the other point of view, there is someone living in his house for decades, all paid off, lives on fixed income. His property tax was $1,200 but is now over $56,000. It wasn't due to any gains he realized but only because other properties sold for more. He is now forced to move because he can't afford his property tax.
The new buyer paying the $56,000 knows full well what his property tax is and will be going forward before he buys the house. The existing owners have no say.
Look at it from the other point of view, there is someone living in his house for decades, all paid off, lives on fixed income. His property tax was $1,200 but is now over $56,000. It wasn't due to any gains he realized but only because other properties sold for more. He is now forced to move because he can't afford his property tax.
The new buyer paying the $56,000 knows full well what his property tax is and will be going forward before he buys the house. The existing owners have no say.
This is why I find it insidious because the action of another is justification enough for the Assessor to charge you more based on an opinion of value... can you imagine the last bubble if people that were simply going about their lives faced 10 to 20% tax increases because of the Real Estate Hysteria and we all know how that ended... the same high rollers simply walked away leaving destruction behind... thank goodness for Prop 13 keeping those with coolers heads out of the mess.
Nothing smacks of a Constitutional taking when taxes force a person from their home through no action of their own...
I know farmers were forced to sell because the Tax Man decided the land was too valuable to farm under the doctrine of highest and best use... it really was a dark period in history.
Just paid my property tax bill... in 10 years it went from $8800 to $10,740... which is just about 2% per year... just how much more should I pay for a 1958 home in East Oakland with 1725 square feet?
Last edited by Ultrarunner; 11-08-2015 at 12:10 PM..
The purchase price between two people is up to two people, the tax rate is between one person and the government where only one party has the ability to determine the amount of pay.
Not exactly, prop 13 was an initiative- people voted for it. If you want it revoked, start a petition to make that happen. I still don't understand how you can say it's unfair. My taxes are higher than anyone in my neighborhood because I bought my house last year and some of my neighbors have been in their homes for 40 years. I don't resent my neighbors for paying less, I'm just glad that in the future I can predict what I will have to pay and if there are large increases in property value I won't get taxed out of my home.
Look at it from the other point of view, there is someone living in his house for decades, all paid off, lives on fixed income. His property tax was $1,200 but is now over $56,000. It wasn't due to any gains he realized but only because other properties sold for more. He is now forced to move because he can't afford his property tax.
The new buyer paying the $56,000 knows full well what his property tax is and will be going forward before he buys the house. The existing owners have no say.
I don't feel sorry for someone sitting in a multi million dollar house having to oh the same tax rate as their neighbor.
This is why I find it insidious because the action of another is justification enough for the Assessor to charge you more based on an opinion of value... can you imagine the last bubble if people that were simply going about their lives faced 10 to 20% tax increases because of the Real Estate Hysteria and we all know how that ended... the same high rollers simply walked away leaving destruction behind... thank goodness for Prop 13 keeping those with coolers heads out of the mess.
Nothing smacks of a Constitutional taking when taxes force a person from their home through no action of their own...
I know farmers were forced to sell because the Tax Man decided the land was too valuable to farm under the doctrine of highest and best use... it really was a dark period in history.
Just paid my property tax bill... in 10 years it went from $8800 to $10,740... which is just about 2% per year... just how much more should I pay for a 1958 home in East Oakland with 1725 square feet?
In most other states people seem to manage to pay their propert tax bill that changes on a regular basis.
I'm just going to give up, seems many are for an inequitable tax system that punishes the young at the benefit of baby boomers, what else is new.
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