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California limits property tax annual appreciation however. Many of these "star scientists" in CA might have bought 30 years ago and have a property tax assessm

California limits property tax annual appreciation however. Many of these "star scientists" in CA might have bought 30 years ago and have a property tax assessment on their $1.7M house of $250k.

SOLAR_FIELDS 9y ago
From talking to coworkers there is such limitation but only to the point that it can only go up 2% per year. I am guessing there is no other type of cap? In Texas such cap exists for people 65 and older where their tax rates are frozen in perpetuity. Does such cap exist in CA? So putting aside inflation and the like, assuming value held constant wouldn’t taxation property values “catch up” after many years? Or are there other factors at play besides the 2% limit?
- inferiorhuman 9y ago
  Look up Prop 13 and Prop 8, it's essentially rent control for property owners. Property tax cannot exceed 1% of the assessed value, and the assessed value cannot increase more than 2% a year. Prop 8 ensures that property taxes go down when the assessed values decline. The caps stay in place until the property changes hands. This applies to all property in California. Commercial? No problem. Second home? Same discounts. There's been talk about either abolishing or reforming Prop 13 via a split roll system, but it's a political third rail.
- yonran 9y ago
  It’s common to see large disparities; from looking at a random street (Betlin Ave, Cupertino) there is a house with an assessed value of $67k while Zillow estimates its value at $1.7M. Assuming that inflation is ≥2% per year yet property values are held constant, it would take 164 years for the assessed value to “catch up” to market value. And the tax discount is not just for the elderly. Children inherit their parents’ low assessment. The tax only jumps up beyond 2% in a year when the owner renovates or sells the house. The tax rate is around 1.25% (limited by Proposition 13 to 1%, plus slightly more for infrastructure bonds). The low tax rate contributes to higher market prices. Proposition 13 is a very good system for property investors.
  - SOLAR_FIELDS 9y ago
    Thanks for this. The deeper insight here helps to add more context to the story of why the property values are so much higher in California than other places.

California limits property tax annual appreciation however. Many of these "star scientists" in CA might have bought 30 years ago and have a property tax assessment on their $1.7M house of $250k.

SOLAR_FIELDS 9y ago

From talking to coworkers there is such limitation but only to the point that it can only go up 2% per year. I am guessing there is no other type of cap? In Texas such cap exists for people 65 and older where their tax rates are frozen in perpetuity. Does such cap exist in CA? So putting aside inflation and the like, assuming value held constant wouldn’t taxation property values “catch up” after many years? Or are there other factors at play besides the 2% limit?

inferiorhuman 9y ago
Look up Prop 13 and Prop 8, it's essentially rent control for property owners. Property tax cannot exceed 1% of the assessed value, and the assessed value cannot increase more than 2% a year. Prop 8 ensures that property taxes go down when the assessed values decline. The caps stay in place until the property changes hands. This applies to all property in California. Commercial? No problem. Second home? Same discounts. There's been talk about either abolishing or reforming Prop 13 via a split roll system, but it's a political third rail.
yonran 9y ago
It’s common to see large disparities; from looking at a random street (Betlin Ave, Cupertino) there is a house with an assessed value of $67k while Zillow estimates its value at $1.7M. Assuming that inflation is ≥2% per year yet property values are held constant, it would take 164 years for the assessed value to “catch up” to market value. And the tax discount is not just for the elderly. Children inherit their parents’ low assessment. The tax only jumps up beyond 2% in a year when the owner renovates or sells the house. The tax rate is around 1.25% (limited by Proposition 13 to 1%, plus slightly more for infrastructure bonds). The low tax rate contributes to higher market prices. Proposition 13 is a very good system for property investors.
- SOLAR_FIELDS 9y ago
  Thanks for this. The deeper insight here helps to add more context to the story of why the property values are so much higher in California than other places.