Prop 13 Loophole? (renters, how much, house)

[zaj2]

Originally Posted by cdgoldilocks

If Prop 13 was rescinded or altered, many more people would be out of homes. I would have a really tough time if my property taxes were doubled or tripled. My local economy sucks. Unemployment is over 20% here where I live. I feel like I pay more than enough taxes.

I here ya. My property taxes are already too high even with Prop 13. Any politician talking about increases taxes like that needs the firing squad.

[Charles]

Originally Posted by zaj2

I here ya. My property taxes are already too high even with Prop 13. Any politician talking about increases taxes like that needs the firing squad.

Your property taxes are too low. Prop 13 should be eliminated.

[Dunbar42]

I love the argument that "my house has gone up so much in value I can't afford the taxes." It's also not fair to shift the property tax burden onto others (future home buyers.) States like Texas and Illinois have much higher property taxes than California and they seem to be doing just fine. It's true that total tax burden is what really matters and if property taxes were raised other taxes should be lowered. But it seems totally unfair to subsidize home owners in this way.

[EscapeCalifornia]

Originally Posted by Dunbar42

I love the argument that "my house has gone up so much in value I can't afford the taxes." It's also not fair to shift the property tax burden onto others (future home buyers.) States like Texas and Illinois have much higher property taxes than California and they seem to be doing just fine. It's true that total tax burden is what really matters and if property taxes were raised other taxes should be lowered. But it seems totally unfair to subsidize home owners in this way.

Name another investment where you get taxed annually on an unrealized gain. If the "value" of your house doubles, does your income double?

If you think other taxes will go down if property taxes are raised, you're extremely naive.

[Dunbar42]

Nor does it seem particularly fair that a married couple gets a $500k tax exemption when they sell their primary residence. Sorry, but I don't feel bad for anybody whose home doubles in value. Last time I checked Illinois and Texas didn't have an epidemic of folks that can't afford their property taxes. Not that I expect the people who benefit from prop 13 to agree with me...

[Oerdin]

Originally Posted by jja100

Everyone knows that when you purchase a home in California the property taxed is locked in at 1% of the purchase price plus about 0.25% for municipal needs.

My question is, can you sell a 600k property to a relative for 50k and have the tax drop from 6k to 500 dollars?

I always see people buy foreclosures for well below market value as well and am wondering if they pay property tax on such a small amount?

My understanding is if you transfer to someone other then a spouse (or add or remove a spouse from the title) then you'd trigger a reappraisal which means they get to estimate the current market value of the property. There is a loophole if you transfer the title of the property to a corporation, LLC, partnership, or trust but you must make sure that the owners are the only people listed as the owners of the corporation, LLC, partnership, or trust when you remove your name from the title and put the corporate/business name on the title.

I believe once the transfer is completed and it's been verified that at the time of the transfer it's effectively the same owner (they own a corporation/business which now owns the house) then you can later sell partial or total ownership in the corporation to anyone you'd like without ever triggering a reappraisal of the property. That means with just a little paperwork even you too can join the big whigs in cheating the local school kids out of a quality education, making sure you don't ever have to pay for local stop signs or stop lights you likely use every day, and that it is someone else's problem to pay to get those potholes fixed (feel free to clog that 1-800 complain number with calls every day though since someone else pays for that too). Ahh, that life of a good for nothing tax cheat who wants something for nothing... Just remember to keep voting Republican or else you might have to actually start paying taxes again.

[KC6ZLV]

Originally Posted by Dunbar42

Nor does it seem particularly fair that a married couple gets a $500k tax exemption when they sell their primary residence. Sorry, but I don't feel bad for anybody whose home doubles in value. Last time I checked Illinois and Texas didn't have an epidemic of folks that can't afford their property taxes. Not that I expect the people who benefit from prop 13 to agree with me...

If your house doubles in value it only means you can sell it for twice as much. Otherwise, you don't see a gain.

The total tax burden is what matters and the burden should be distributed across the population. The tax burden shouldn't be placed on one segment of the population, such as property owners.

Californian's pay close to the national average in property taxes in terms of dollar amount. In addition, they we pay income tax, sales taxes, and a whole long list of taxes and fees for utilities, phones, and a high vehicle registration fee. The problem isn't Prop 13. It is management.

[Ceece]

I've always had trouble with basing property tax on "market value" anyway. Should be based on sq ft or something.

[EscapeCalifornia]

Originally Posted by Ceece

I've always had trouble with basing property tax on "market value" anyway. Should be based on sq ft or something.

Makes sense. Bigger houses theoretically have more people consuming public resources. Taxing by the square foot would also encourage empty-nesters to downsize and make room for people who could use the space. Market value is so arbitrary too. If the value of a house doubled and the tax bill along with it, that doesn't mean that the government's cost of providing services doubled.

[ZhugeLiang]

Originally Posted by PragmaticMarketer

Prop 13 was short-sighted, 10th-grade knee-jerk economic logic in the 70s, and it's a Titanic-sized, $10 billion ball and chain on our economy today.

So your answer is to actually repeal prop 13, even in an economic downturn?

That's great, "Hey little Johnny, we're going to fund your education by throwing you and your family out of your home after your parent's property taxes quadruple!"

Brilliant.