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Well, on a purely economic basis, many of those homeowners, including investment funds, are paying < 0.1% in property tax and sitting on properties that are wor

by nshelly 10y ago

Well, on a purely economic basis, many of those homeowners, including investment funds, are paying < 0.1% in property tax and sitting on properties that are worth millions in value. As an example, the homeowner of one property with a market value of $7M was paying 0.04% in tax.[1] Property taxes help pay for streets, police, ambulatory services, schools and maintaining parks. These essential services are paid for "at the expense of" renters and new homeowners. Of course, this deeply vested interest group also manifests itself in roadblocks for new developments that would mitigate the drastic increases in housing costs. [1] http://www.zillow.com/homedetails/1536-Bryant-St-Palo-Alto-CA-94301/19497046_zpid/ http://www.zillow.com/homedetails/1536-Bryant-St-Palo-Alto-C...

JustSomeNobody 10y ago
Oh. So it is somehow the homeowner's fault that the property values have increased around them?
- nshelly 10y ago
  Not their fault, but it is their gain. One of the other posts here mentions a few solutions that wouldn't force retirees or those on fixed incomes out of their newly valuable properties. The coastal areas of California are unique in the US in that vast discrepancies exist between market value and what long-time property owners pay. - Apply market-rate taxation only for values over a certain threshold, say $1m+ and non-owner occupied - Defer tax payments until the property changes hands (aka they sell the property or pass it on) - Reverse mortgages
  - JustSomeNobody 10y ago
    Ahhh... so basically make it financially impossible for that property to be handed down to their kids? Wow. We really have become a horrible society.
  - burfog 10y ago
    It's completely messed up that a change in regional average property value could cause a change in total tax revenue. This causes a city's tax income to vary wildly. Cities take on obligations (bonds, salary increases, pensions) in good times and then hit disaster in bad times. We fight this in a stupid way. We limit tax increases for a property, with a reset upon sale. This discourages people from moving closer to work, causing our roads to be clogged with commuters. The right way is to say that assessed home value relates to the total portion of the city budget that your taxes must support. Your tax bill then wouldn't change unless the city budget changes or the relative value of your property changes. Subjecting the total city budget to voter approval is OK. Basically the problem is millage rate. The dollar value of your property should not directly (by simple multiplication or division) translate into a tax amount. It should instead translate into a portion of the total. That is, it should represent your share.

by nshelly 10y ago

JustSomeNobody 10y ago

Oh. So it is somehow the homeowner's fault that the property values have increased around them?

nshelly 10y ago
Not their fault, but it is their gain. One of the other posts here mentions a few solutions that wouldn't force retirees or those on fixed incomes out of their newly valuable properties. The coastal areas of California are unique in the US in that vast discrepancies exist between market value and what long-time property owners pay. - Apply market-rate taxation only for values over a certain threshold, say $1m+ and non-owner occupied - Defer tax payments until the property changes hands (aka they sell the property or pass it on) - Reverse mortgages
- JustSomeNobody 10y ago
  Ahhh... so basically make it financially impossible for that property to be handed down to their kids? Wow. We really have become a horrible society.
- burfog 10y ago
  It's completely messed up that a change in regional average property value could cause a change in total tax revenue. This causes a city's tax income to vary wildly. Cities take on obligations (bonds, salary increases, pensions) in good times and then hit disaster in bad times. We fight this in a stupid way. We limit tax increases for a property, with a reset upon sale. This discourages people from moving closer to work, causing our roads to be clogged with commuters. The right way is to say that assessed home value relates to the total portion of the city budget that your taxes must support. Your tax bill then wouldn't change unless the city budget changes or the relative value of your property changes. Subjecting the total city budget to voter approval is OK. Basically the problem is millage rate. The dollar value of your property should not directly (by simple multiplication or division) translate into a tax amount. It should instead translate into a portion of the total. That is, it should represent your share.