4 ms·

Why would you buy a new property and lose 6% to realtors? Or take out a new possibly more expensive loan. I am not sure property tax is a big motivator. Do y

Why would you buy a new property and lose 6% to realtors? Or take out a new possibly more expensive loan. I am not sure property tax is a big motivator. Do you have studies that show it's negative effect?

cjlars 9y ago
Why would it not be a big motivator? don't know about LA, but in SF tax is just shy of 1.2%, if you have a mortgage at 3.5%, and you've held your property for a long time, you can easily see your property tax triple and your cost of living go up ~10-20% in aggregate just by being assessed at the current market level in a new home (with the same value) on the other side of town... And that's every year, not just once on the sale. It seems pretty clear to me that 10% or 20% makes a big difference. Plenty of people will move across town to pay $2,400 a month instead of $3,000, why would home-owners be fundamentally different.
mturmon 9y ago
Your comment indicates you may not know about how Prop. 13 works. Property valuations can get small year-to-year bumps, but a sale triggers a re-assessment, with vastly increased property taxes after that. My neighbor across the street bought in 1975 for $28K, and their valuation for tax assessment last year was $162K. Their next-door neighbor bought last year for $1.5M and their assessed value is $920K. Their houses are quite similar, but one pays $7500 more a year in property taxes. That difference can motivate people to endure a long commute, to hang on to a low assessment.
- rosege 9y ago
  As someone living in a country without annual property taxes Im not really qualified to comment, but, it almost sounds like the solution is to allow people to transfer their low assessments on to new properties - this is obviously a huge advantage to older people but it would allow real estate to be used more efficiently.
  - exclusiv 9y ago
    What country is this and how are local taxes collected then? I'm intrigued.
- shostack 9y ago
  Also, this can cause some really interesting (not in a good way) issues with what those tax dollars get you. For example, there have been some local measures I've seen where they want tax assessments based on a percentage of your current tax, not a flat rate. As such, new residents end up paying massively higher amounts of the new measures than long-time residents. Long-time residents have had the ability to make use of the services their tax dollars have provided for a long time, whereas new residents have not. Old residents might be all about taxes that get them things they want because they don't have to pay much at all, whereas new residents might see a material impact because of how high some of those amounts might be.
- PretzelFisch 9y ago
  I understand how it works, I don't think if I bought a house for 100k that is now worth 1 million I would move across town for a shorter commute like the parent suggests. I would loose money from transactions costs and loan fees. My school district would change, along with other neighborhood amenities. It will more then likely work out better to commute a little.

cjlars 9y ago

Why would it not be a big motivator? don't know about LA, but in SF tax is just shy of 1.2%, if you have a mortgage at 3.5%, and you've held your property for a long time, you can easily see your property tax triple and your cost of living go up ~10-20% in aggregate just by being assessed at the current market level in a new home (with the same value) on the other side of town... And that's every year, not just once on the sale. It seems pretty clear to me that 10% or 20% makes a big difference. Plenty of people will move across town to pay $2,400 a month instead of $3,000, why would home-owners be fundamentally different.

mturmon 9y ago

Your comment indicates you may not know about how Prop. 13 works. Property valuations can get small year-to-year bumps, but a sale triggers a re-assessment, with vastly increased property taxes after that. My neighbor across the street bought in 1975 for $28K, and their valuation for tax assessment last year was $162K. Their next-door neighbor bought last year for $1.5M and their assessed value is $920K. Their houses are quite similar, but one pays $7500 more a year in property taxes. That difference can motivate people to endure a long commute, to hang on to a low assessment.

rosege 9y ago
As someone living in a country without annual property taxes Im not really qualified to comment, but, it almost sounds like the solution is to allow people to transfer their low assessments on to new properties - this is obviously a huge advantage to older people but it would allow real estate to be used more efficiently.
- exclusiv 9y ago
  What country is this and how are local taxes collected then? I'm intrigued.
shostack 9y ago
Also, this can cause some really interesting (not in a good way) issues with what those tax dollars get you. For example, there have been some local measures I've seen where they want tax assessments based on a percentage of your current tax, not a flat rate. As such, new residents end up paying massively higher amounts of the new measures than long-time residents. Long-time residents have had the ability to make use of the services their tax dollars have provided for a long time, whereas new residents have not. Old residents might be all about taxes that get them things they want because they don't have to pay much at all, whereas new residents might see a material impact because of how high some of those amounts might be.
PretzelFisch 9y ago
I understand how it works, I don't think if I bought a house for 100k that is now worth 1 million I would move across town for a shorter commute like the parent suggests. I would loose money from transactions costs and loan fees. My school district would change, along with other neighborhood amenities. It will more then likely work out better to commute a little.