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Prop 13. Very low property taxes create tremendous incentives to hold on to real estate you own. People paying 2000 level property taxes on real estate with 201

• dragonwriter 11y ago
  > Prop 13. Very low property taxes create tremendous incentives to hold on to real estate you own. Very low property taxes should be relatively neutral between holding and trading compared to higher property taxes. Prop. 13 encourages holding over trading because, while it does control property tax rate, it also constrains tax basis value increases to small annual increases while you hold property, but reassesses at full market value when you buy a new property. Which means, it increases the incentives to hold on to property once you've purchased it and decreases the incentives to purchase property, because the property is (net) higher value to the current owner than a new purchaser with otherwise similar profile, since the new purchaser would have to pay higher annual property taxes.