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Yep, prop 13 and insane property prices serve that function in the SF Bay Area. If you buy now, you pay $2M upfront and ~$20k/yr property tax for a small ranch

by ericd 7y ago

Yep, prop 13 and insane property prices serve that function in the SF Bay Area. If you buy now, you pay $2M upfront and ~$20k/yr property tax for a small ranch house, while your neighbor who has lived in a similar house for 40 years pays <$2k/yr, less on an inflation adjusted basis than when they moved in, thanks to prop 13. The cherry on top is that after paying a small fortune for your house, your municipal (and school) budgets are stretched thin, despite some of the highest land values in the country, because so few of the long time residents are paying anywhere near the nominal 1.x% rate. And then the long time residents loudly complain that infrastructure is buckling, and we can't afford to improve it, so we can't expand housing. It's maddening.

sethammons 7y ago
The flip side of that. I live outside California and my neighbor has lived in his place for over 30 years, and it was his dad's place for 30 years before that. Because property taxes go up with assessed value and because the area became more affluent around him, he is now faced with having to sell his business that his dad started to cover property taxes or lose his home.
- Retric 7y ago
  If property taxes are unplayable then selling the house should net a lot of money. If he really just wants to stay there he could get a reverse mortgage at this point to pay property taxes. Unless he has already dipped into that equity.
- ericd 7y ago
  What area? But yeah, property taxes can be rough, they’re meant to ensure that you’re not sitting on land that could be used more productively. On the other hand, your neighbor’s investment in land has apparently paid off in terms of appreciation. With prop 13, I’d support age-based property tax abatement, but the current way it’s set up is insane (commercial property gets the same treatment, the tax basis can be passed on to heirs, if you sell less than some fractional share of the land, it doesn’t trigger a reset, and some other insane provisions).

by ericd 7y ago

sethammons 7y ago

The flip side of that. I live outside California and my neighbor has lived in his place for over 30 years, and it was his dad's place for 30 years before that. Because property taxes go up with assessed value and because the area became more affluent around him, he is now faced with having to sell his business that his dad started to cover property taxes or lose his home.

Retric 7y ago
If property taxes are unplayable then selling the house should net a lot of money. If he really just wants to stay there he could get a reverse mortgage at this point to pay property taxes. Unless he has already dipped into that equity.
ericd 7y ago
What area? But yeah, property taxes can be rough, they’re meant to ensure that you’re not sitting on land that could be used more productively. On the other hand, your neighbor’s investment in land has apparently paid off in terms of appreciation. With prop 13, I’d support age-based property tax abatement, but the current way it’s set up is insane (commercial property gets the same treatment, the tax basis can be passed on to heirs, if you sell less than some fractional share of the land, it doesn’t trigger a reset, and some other insane provisions).