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In my opinion, Texas gets this right (as a left-winger who's lived in Texas for a number of years, I don't get to say this that frequently). If you're over 65,
by mjn 9y ago
In my opinion, Texas gets this right (as a left-winger who's lived in Texas for a number of years, I don't get to say this that frequently). If you're over 65, you can defer property taxes on the home you occupy as long as you continue to own and occupy the home. They aren't even just frozen, you can simply not pay the taxes at all. This means you can't lose your home due to inability to pay property taxes. But you don't get to play both sides and get a property-tax reduction while also passing on a big capital-gains windfall to your heirs. The taxes are deferred, and when the home is either sold, or transferred to heirs upon your death, the deferred taxes are assessed against the capital gains and/or the estate. (If the estate ends up being worth less than the deferred taxes, the state eats the difference, but deferred taxes are recovered from whatever value it does have.)
- kcorbitt 9y agoCool, sounds very similar to what I was thinking! Glad to find out that someone has implemented it. > as a left-winger who's lived in Texas for a number of years, I don't get to say this that frequently Governance would be so much more productive if we were all willing to get behind ideas that have been proven to work, even if the "other side" thought of them first. Like you've done here. :)
- rxhernandez 9y agoPreferably there wouldn't be these sides at all. Just a bunch of different people that support different things. I know how naive that all sounds. I'm just worried that these two sides are going to tear this nation apart in very disastrous ways.
- nbadg 9y agoThat's actually really neat. If anyone else was interested in reading the details, here's the relevant statute: http://www.statutes.legis.state.tx.us/StatutesByDate.aspx?code=TX&level=SE&value=33.06&date=6/26/2014 http://www.statutes.legis.state.tx.us/StatutesByDate.aspx?co...
- RhysU 9y agoWhat happens to someone who lets the taxes build up but needs to sell (medical bills, say)? This screams of unintended consequences where the state taxes a windfall from someone forced to sell.
- deleted 9y ago[deleted]
- tmh79 9y agounintented consequences... like what we're dealing with right now with the current california housing market...
- desdiv 9y agoTaking out an HELOC against the property might be one solution.
- JamesBarney 9y agoThe property taxes take precedence over loan collections, so no one will give you a HELOC when you have a bunch of back taxes.
- mjn 9y agoI don't see how it's a windfall on the part of the state, it's just collecting what's owed to them in arrears. It's not required that you defer the taxes. You could pay them up front. It's simply an option, that if you lack liquidity (because your assets are tied up in your house), you can defer payment until a "liquidity event", as they say in the startup world. There isn't any kind of right to both not pay property taxes and turn your property into liquid cash in your bank account. The purpose of the deferral option is that even if you have no liquid cash with which to pay property taxes, you can never be forced out of your home for that reason. That's the stated purpose of Prop 13, too, though perhaps not its real purpose.
- JamesBarney 9y agoIf the government didn't make them pay taxes it would be basically writing giant checks to home owners who own expensive houses, don't pay their tax bills, and rack up large amounts of medical bills. And the government would pay those people with money from renters, tax payers, and the insured.
- karcass 9y agoThe taxes deferred as a lien, but the lien accrues 8% interest. If there's any value in the house, it would be cheaper (at current rates) to refi and pay out of that.
- droopyEyelids 9y agoHoly CrapOla this is a big asterisk
- erikpukinskis 9y agoWhy the over-65 requirement? Why not just pay taxes on the purchase price, and defer all taxes on appreciated value until the sale? And why not let the children defer the taxes further? It'd be tragic if your kids were forced to sell the family home immediately upon your death because they couldn't afford the taxes. Seems like the important innovation here is defer-until-sale, not the pro-retiree, anti-inheritance values.
- aninhumer 9y agoLetting people defer indefinitely may let them run up more deferred tax than the value of the property. Restricting it to over 65s limits how much of a bill people can run up.
- erikpukinskis 9y agoIf the tax could add up to more than the value of the property, doesn't that mean the tax is way too high and should be capped?
- aninhumer 9y agoNo? Whatever rate you set it at, if you let people defer it indefinitely, it can eventually exceed the value of the property. That in itself doesn't imply the rate is too high.
- alexc05 9y agoI also think that the retirement-age might also be part of that. At 65 your income is expected to drop significantly. By allowing deferred costs on property tax at the age of retirement, you reduce a pressure on tight resources. Seniors in that case can spend on food / medical and the government doesn't get the bad press of evicting a grandmother who has to choose between feeding herself and paying property tax.
- brazzledazzle 9y agoEspecially if, assuming what's reported in this thread is true, they have an 8% lien on the property.