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Class envy, much? Lemme guess - you watch a lot of Rachel Maddow & the Ed Show.
No, never heard of them shows! Plus the fact it was the OP who mentioned the 6 million dollar home with the $75k property tax! So why didn't you attack the OP?
So, admit it that you're one of those who lives in a million dollar+ home so you can rub it in to those who reads your uncalled for subtle sarcastic insinuating comments!
I just detest sarcasm coming from anyone attacking the poster and not the post itself!
No, never heard of them shows! Plus the fact it was the OP who mentioned the 6 million dollar home with the $75k property tax! So why didn't you attack the OP?
I was just curious, because my coworker was talking about the $75k tax bill he pays. I'm sure he has no trouble paying it. He may even have enough money in the bank to pay the next twenty or thirty years of it. Or maybe not. I don't know.
But anyway, you know how it is at these high tech startups. Rumors about how much money certain people are worth. Huge figures get floated around - like this particular guy is supposedly worth "$80 million)".... I tend to be skeptical unless I see some hard facts to back it up. So one day he mentioned his tax bill and I just wanted to get an idea of how much such a house would be worth.
people who worked extremely hard to live in beautiful towns such as Saratoga
Maybe they bought pieces of paper in a startup and got lucky, selling those pieces of paper for millions. Not necessarily extremely hard work. To say nothing of the many folks down that way that enjoy deep troughs of family money, and properties handed to them on silver platters. Not necessarily extremely hard work.
What's rather amusing is that some of these lucky people who didn't have to earn their wealth are usually not terribly well-versed in such esoteric, unseen things as property taxes. Could give rise to heart palpitations, if one is unprepared for the shock of staring down the barrel of a $100k annual tax bill that seemingly dropped out of the sky. For those fortunate enough to reside in the Saratogas of the world, your trusted financial advisor is your best friend.
In order to be paying $75,000 a year in property taxes, a house would have to have been purchased for $6,000,000, or have an assessed value in the same amount. California's Prop. 13 put a cap of 1.25% of the sales price or assessed value on the property, which can rise up to 1% per year, but no more.
In order to be paying $75,000 a year in property taxes, a house would have to have been purchased for $6,000,000, or have an assessed value in the same amount. California's Prop. 13 put a cap of 1.25% of the sales price or assessed value on the property, which can rise up to 1% per year, but no more.
Thank you so much for chiming in late, and with so much incorrect information.
1) Prop 13 put a cap of 1% of assessed value on the STATE property tax. There is no limit on voter approved, local "special assessments".
2) Prop 13 restricted annual increases of assessed value of real property to an inflation factor, not to exceed 2% per year.
The property tax is paid on the assessed value of the house, NOT the "market value". If someone has lived in the house for a long time, the assessed value is likely lower than the market value, possibly quite a bit lower, due to proposition 13 passed back in the 1970s. This trend changed around 2008 when the housing market imploded, but somebody who has been in their house since 2002 (or earlier) probably has a lower assessed value than the actual resale value.
I live in an area where house prices imploded. The county reassessed all the homes and lowered them accordingly. This saved people from having to apply for a reduction. My property tax dropped 30%. It is now starting to creep back up as prices are slowly recovering.
Anyone that would pay that much for a private residence in Saratoga is an idiot. Anyone who has that much money to spend on a private residence has too much money.
Who are you to judge who has too much money? There is nothing wrong with buying an expensive home in Saratoga.
In order to be paying $75,000 a year in property taxes, a house would have to have been purchased for $6,000,000, or have an assessed value in the same amount. California's Prop. 13 put a cap of 1.25% of the sales price or assessed value on the property, which can rise up to 1% per year, but no more.
That is not true. Prop 13 sets the property tax at 1% of the price of the home when purchased. this is the initial assessed value. The assessed value going froward cannot increase more than 2% annually. There can be additional fees added. For example, I actually pay 1.15%. There are areas in California that pay as much as 2.5 - 3% such as Mello Roos areas. This tends to be in new areas with little infrastucture and no schools. This is very rare in the Bay area. The rate varies by development, not city or county so you can have 2 houses a block apart where one pays a higher rate than the other. It depends whether the developer includes the cost of infrastructure in the price of the home or whether it is a separate bond payed by the buyer.
That is not true. Prop 13 sets the property tax at 1% of the price of the home when purchased. this is the initial assessed value. The assessed value going froward cannot increase more than 2% annually. There can be additional fees added. For example, I actually pay 1.15%. There are areas in California that pay as much as 2.5 - 3% such as Mello Roos areas. This tends to be in new areas with little infrastucture and no schools. This is very rare in the Bay area. The rate varies by development, not city or county so you can have 2 houses a block apart where one pays a higher rate than the other. It depends whether the developer includes the cost of infrastructure in the price of the home or whether it is a separate bond payed by the buyer.
The bolded part is true, but there's a little catch : the assessed value cannot go higher than "2% per year since the time the house was last sold". The little nuance here is that if the assessed value is reduced (or simply not increased by the max 2% for several years) as it was around 2000-01 and again around 2009-2011 due to falling house prices, then the assessed value CAN go up more than 2% each year when the property values recover - up until you get back to what the assessed value would have been had there been no "slow down" or reduction in assessed value.
Example : suppose a house was bought for $100K in 1999 (I know it's not realistic, but it's easier to calculate).
The assessed value cannot increase by more than 2% each year (if housing prices are rising). So :
1999 : 100K, 2K increase in value:
2000 :102K, means next year's increase of assessed value goes up by $2040 :
2001 : 104,040 means an additional $2080 next year :
2002 : 106,121 means an additional 2122$ :
2003 : 108,243 means an additional 2164 :
2004 : 110,407 means an additional 2208 :
2005 : 112,615 would be the maximum assessed value this year
Now, suppose that the house was purchased in 1999, but the bottom dropped out of the market, and the county assessor left the valuation at $100K for 2000, 01, 02, 03, and 04. But, for the 6 month period preceding the calculation of the 2005 property tax the market recovered - heck it went crazy good - and real estate prices (based on avg sale prices per square foot) actually went up by 25% during those 6 months! The assessor could immediately increase the assessed value of the house for 2005 taxes from the $100K that it was in 2004 to the $112,615 it would have been had the assessed value gone up 2% every year (that's an increase of 12.615% from 2004 to 2005).
I know that this is the case, because that happened to me (well, my house valuation) after the housing market recovered from the "bubble burst" of 2000-2001. It was challenged in court and the challenge lost. (Now, the assessor actually spread the increase out over 2-3 years instead of giving it a one time jump, but the assessed value increased by much more than 2% for those years.)
Also, just because the market imploded doesn't mean that your assessed value won't go up by 2% every year. I know that because my assessed value has been going up by 2% a year for the past 6-7 year. Why? Because the assessed value of my home is lower than the actual value (I bought my home over 15 years ago, and the assessed value hasn't caught up to the huge increases in home prices in 1997-2001 and again 2003-2007.) I'm not complaining, I'm still paying taxes on an assessed value that is probably half what the house is worth if I sold it today.
Anyhow, it's possible that nobody cares, but detail-oriented me had to point out the little nuance. It's a slow, cold, gray, rainy day today and nothing to do except surf the interwebs.
The bolded part is true, but there's a little catch : the assessed value cannot go higher than "2% per year since the time the house was last sold". The little nuance here is that if the assessed value is reduced (or simply not increased by the max 2% for several years) as it was around 2000-01 and again around 2009-2011 due to falling house prices, then the assessed value CAN go up more than 2% each year when the property values recover - up until you get back to what the assessed value would have been had there been no "slow down" or reduction in assessed value.
Example : suppose a house was bought for $100K in 1999 (I know it's not realistic, but it's easier to calculate).
The assessed value cannot increase by more than 2% each year (if housing prices are rising). So :
1999 : 100K, 2K increase in value:
2000 :102K, means next year's increase of assessed value goes up by $2040 :
2001 : 104,040 means an additional $2080 next year :
2002 : 106,121 means an additional 2122$ :
2003 : 108,243 means an additional 2164 :
2004 : 110,407 means an additional 2208 :
2005 : 112,615 would be the maximum assessed value this year
Now, suppose that the house was purchased in 1999, but the bottom dropped out of the market, and the county assessor left the valuation at $100K for 2000, 01, 02, 03, and 04. But, for the 6 month period preceding the calculation of the 2005 property tax the market recovered - heck it went crazy good - and real estate prices (based on avg sale prices per square foot) actually went up by 25% during those 6 months! The assessor could immediately increase the assessed value of the house for 2005 taxes from the $100K that it was in 2004 to the $112,615 it would have been had the assessed value gone up 2% every year (that's an increase of 12.615% from 2004 to 2005).
I know that this is the case, because that happened to me (well, my house valuation) after the housing market recovered from the "bubble burst" of 2000-2001. It was challenged in court and the challenge lost. (Now, the assessor actually spread the increase out over 2-3 years instead of giving it a one time jump, but the assessed value increased by much more than 2% for those years.)
Also, just because the market imploded doesn't mean that your assessed value won't go up by 2% every year. I know that because my assessed value has been going up by 2% a year for the past 6-7 year. Why? Because the assessed value of my home is lower than the actual value (I bought my home over 15 years ago, and the assessed value hasn't caught up to the huge increases in home prices in 1997-2001 and again 2003-2007.) I'm not complaining, I'm still paying taxes on an assessed value that is probably half what the house is worth if I sold it today.
Anyhow, it's possible that nobody cares, but detail-oriented me had to point out the little nuance. It's a slow, cold, gray, rainy day today and nothing to do except surf the interwebs.
I know all of that. I just didn't want to go into all of that detail so I generalized it.
I purchased my home brand new in 2002 for $279,000 base price. It is a 2800 sq. ft 4BR, 3BA, 3 car garage in an upscale area. I added $40,000 in builder upgrades but they were not included in the price for tax assessment because I did not include them in the mortgage. That is a little nuance that many people don't know. So my first year tax assessed value was $279,000. The next year I added another $75,000 in improvements like a swimming pool/spa, large covered patio etc. The cost of the items that required building permits like the swimming pool and patio cover raised my tax assessment by $60,000 so my second year assessment was $340,000. Meanwhile prices were soaring and in 2005-2006 the market value of my home increased to $640,000 of course prop 13 kept the annual tax assessed value to 2% increase. Then in 2007-2008 the market crashed and the market value of my home went down to about $250,000. Riverside County took a proactive measure and automatically reassessed the value of the homes to avoid being deluged with applications for reductions. At the peak assessed value of $365,000, my taxes were $4,200. They dropped down to $3,100. Since then the assessed value has gone up a little and my taxes this month were $3,400. The market value of my house is now about $340,000 but the assessed value is lower because they base the tax assessed value at beginning of the year. I have neighbors that bought their homes as resales in 2005-2006 that were paying $8,000 in property tax.
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