4 ms·

From my understanding, it's not even a matter of upgrading. Two neighbors with exactly identical homes, who have lived in the same city for 20 years, wouldn't b

From my understanding, it's not even a matter of upgrading. Two neighbors with exactly identical homes, who have lived in the same city for 20 years, wouldn't be able to sell their houses to one another (for a net gain of $0 each) without triggering a massive tax increase for both parties.

matt_wulfeck 9y ago
Yes that is correct. They also can’t build their home out and increase the square footage to better accommodate their families without triggering a tax appraisal. In a word their stuck, which helps explain again why there’s very little mobility.
whb07 9y ago
Theres a common real estate move where you can defer your taxes on a real estate sale if you use the proceeds to buy a similar amount of property (dollar amount) [0]. So as long as the proceeds from the sale go into a similar type of property/business then you can defer taxes for a future date. [0]:https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031 https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-c...
- matt_wulfeck 9y ago
  The problem we’re describing is that their property taxes would increase sinificanty, thousands of dollars a month.
  - whb07 9y ago
    Yes temporarily sure? But if you keep deferring can you really tell me what the tax laws will be 50 years from now? I don't think in 2068 if you finally decide to sell and cash out the IRS will come with a list " Well on 2030: taxes were X%, again on 2035: taxes were Y%". They will just give you a bill for the present day tax system
    - SeeDave 9y ago
      From my understanding, the issue is with the annual recurring property taxes which have a capped annual increase per Proposition 13. Thus, the "taxable value" of the homes pre-sale is a fraction of what it is post-sale, even after swapping for an identical home. This is not an IRS issue, so much as a county tax assessor issue.
- usaar333 9y ago
  This is for investment property, not housing one resides in.
zhengyi13 9y ago
My house is functionally identical to my neighbors', but they've been in our neighborhood for ~20 years; me for just 8. Their taxes are ~$5k; mine are ~$9k. Some of that is certainly from the purchase price as assessed in 2010, but at least $2k is for the couple minor things I've pulled permits for where the city's reassessed us each time and jacked them up. I'm about done pulling permits.
- DrScump 9y ago
  Where are you? In CA, cities don't have assessment powers.

matt_wulfeck 9y ago

Yes that is correct. They also can’t build their home out and increase the square footage to better accommodate their families without triggering a tax appraisal. In a word their stuck, which helps explain again why there’s very little mobility.

whb07 9y ago

Theres a common real estate move where you can defer your taxes on a real estate sale if you use the proceeds to buy a similar amount of property (dollar amount) [0]. So as long as the proceeds from the sale go into a similar type of property/business then you can defer taxes for a future date. [0]:https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031 https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-c...

matt_wulfeck 9y ago
The problem we’re describing is that their property taxes would increase sinificanty, thousands of dollars a month.
- whb07 9y ago
  Yes temporarily sure? But if you keep deferring can you really tell me what the tax laws will be 50 years from now? I don't think in 2068 if you finally decide to sell and cash out the IRS will come with a list " Well on 2030: taxes were X%, again on 2035: taxes were Y%". They will just give you a bill for the present day tax system
  - SeeDave 9y ago
    From my understanding, the issue is with the annual recurring property taxes which have a capped annual increase per Proposition 13. Thus, the "taxable value" of the homes pre-sale is a fraction of what it is post-sale, even after swapping for an identical home. This is not an IRS issue, so much as a county tax assessor issue.
usaar333 9y ago
This is for investment property, not housing one resides in.

zhengyi13 9y ago

My house is functionally identical to my neighbors', but they've been in our neighborhood for ~20 years; me for just 8. Their taxes are ~$5k; mine are ~$9k. Some of that is certainly from the purchase price as assessed in 2010, but at least $2k is for the couple minor things I've pulled permits for where the city's reassessed us each time and jacked them up. I'm about done pulling permits.

DrScump 9y ago
Where are you? In CA, cities don't have assessment powers.