7 ms·

There's good reasons to keep part of it. I figure: You get to have the Prop 13 effect on one property - notionally, your home, but since it's difficult / gameab

There's good reasons to keep part of it. I figure: You get to have the Prop 13 effect on one property - notionally, your home, but since it's difficult / gameable to determine which place is "your home", fuggedaboutit, and just say "pick one". Because yeah, it'd suck to lose your home that you're supposed to own because your neighborhood got pricey.

davidw 7y ago
I think your point is an important one to consider and mitigate if property tax reform ever comes to the west coast (Oregon has a similar system). However: giving people an incentive to make sure their neighborhood doesn't get too pricey (build more!) is probably not bad, either.
Obi_Juan_Kenobi 7y ago
There are reasonable ways to protect people from property-tax shocks. Prop 13 is about as dumb a mechanism you could design.
- 6gvONxR4sf7o 7y ago
  >There are reasonable ways to protect people from property-tax shocks. Such as?
  - rcpt 7y ago
    This is the best summary I know https://taxfoundation.org/property-tax-limitation-regimes-primer/ https://taxfoundation.org/property-tax-limitation-regimes-pr...
myvoiceismypass 7y ago
How does one “lose their home” if the value (to resell to others) goes down, but they aren’t moving & still living there?
- panopticon 7y ago
  > it'd suck to lose your home that you're supposed to own because your neighborhood got pricey This would imply that the value goes up (location, location, location). That would cause property taxes to increase and may drive people out that can't afford to stay.
- mlyle 7y ago
  They're saying that if the value goes up you can have to pay increased property taxes that you now can't afford.
  - rcpt 7y ago
    It's really not a bad problem to have.
    - mlyle 7y ago
      As a purely economic position, sure, it's not awful... But if you're going to chase retirees out of communities they've lived their entire life that's kinda unfortunate.
      - rcpt 7y ago
        Meh. We chase old renters out all the time and they don't get hundreds of thousands of dollars in windfall profits along the way.
mlyle 7y ago
Lots of states have regimes where you can defer (often interest-free) the amount of property tax increase above a certain limit to time of sale. This may be a better way to handle it than what California does. That is, if your property tax was $10,000 last year when you bought, and would increase to $12,000 this year, the state would give you an indefinite, interest free loan for $1500 or whatever secured by the property.
- RangerScience 7y ago
  Hmm. I like the sentiment, but I'd be worried about the implementation (sounds like complex tax math) and with potential downsides (make less money when selling could lead to selling less; I can imagine a housing bubble popping and you end up under water due to owed taxes when the property was worth more). Although, if other states do it, should be data to talk to those predictions...
  - mlyle 7y ago
    > Hmm. I like the sentiment, but I'd be worried about the implementation (sounds like complex tax math) You already need to keep track of two assessed values for prop 13, along with history for catch-up basis increase. All you need to keep track of here is original tax rate (to know the maximum for this year) and deferred amount. > I can imagine a housing bubble popping and you end up under water due to owed taxes when the property was worth more No one's guaranteed to make money on every asset.
    - RangerScience 7y ago
      > No one's guaranteed to make money on every asset. There's a difference between "I have lost money on this thing" and "I owe more because I sold this thing". By a house (debt-free) for $100, and, say, tax of $1. Something happens for a decade, so it's worth $1000, tax of $10 per year for 10 years; $90 is deferred. Later, thing un-happens and more, now house is worth $60, with $90 in deferred tax, so if you sell it... you end up owing $30, for a net loss of $70, instead of the $50 in loss on the asset? ...or is there something I'm getting really, really wrong? Seems simpler (and safer) to say property tax doesn't change (instead of accumulating interest-free debt), and profit from selling is capital gains, but I know jack shit about this stuff and am willing to be wrong.
deleted 7y ago
[deleted]

davidw 7y ago

I think your point is an important one to consider and mitigate if property tax reform ever comes to the west coast (Oregon has a similar system). However: giving people an incentive to make sure their neighborhood doesn't get too pricey (build more!) is probably not bad, either.

Obi_Juan_Kenobi 7y ago

There are reasonable ways to protect people from property-tax shocks. Prop 13 is about as dumb a mechanism you could design.

6gvONxR4sf7o 7y ago
>There are reasonable ways to protect people from property-tax shocks. Such as?
- rcpt 7y ago
  This is the best summary I know https://taxfoundation.org/property-tax-limitation-regimes-primer/ https://taxfoundation.org/property-tax-limitation-regimes-pr...

myvoiceismypass 7y ago

How does one “lose their home” if the value (to resell to others) goes down, but they aren’t moving & still living there?

panopticon 7y ago
> it'd suck to lose your home that you're supposed to own because your neighborhood got pricey This would imply that the value goes up (location, location, location). That would cause property taxes to increase and may drive people out that can't afford to stay.
mlyle 7y ago
They're saying that if the value goes up you can have to pay increased property taxes that you now can't afford.
- rcpt 7y ago
  It's really not a bad problem to have.
  - mlyle 7y ago
    As a purely economic position, sure, it's not awful... But if you're going to chase retirees out of communities they've lived their entire life that's kinda unfortunate.
    - rcpt 7y ago
      Meh. We chase old renters out all the time and they don't get hundreds of thousands of dollars in windfall profits along the way.

mlyle 7y ago

Lots of states have regimes where you can defer (often interest-free) the amount of property tax increase above a certain limit to time of sale. This may be a better way to handle it than what California does. That is, if your property tax was $10,000 last year when you bought, and would increase to $12,000 this year, the state would give you an indefinite, interest free loan for $1500 or whatever secured by the property.

RangerScience 7y ago
Hmm. I like the sentiment, but I'd be worried about the implementation (sounds like complex tax math) and with potential downsides (make less money when selling could lead to selling less; I can imagine a housing bubble popping and you end up under water due to owed taxes when the property was worth more). Although, if other states do it, should be data to talk to those predictions...
- mlyle 7y ago
  > Hmm. I like the sentiment, but I'd be worried about the implementation (sounds like complex tax math) You already need to keep track of two assessed values for prop 13, along with history for catch-up basis increase. All you need to keep track of here is original tax rate (to know the maximum for this year) and deferred amount. > I can imagine a housing bubble popping and you end up under water due to owed taxes when the property was worth more No one's guaranteed to make money on every asset.
  - RangerScience 7y ago
    > No one's guaranteed to make money on every asset. There's a difference between "I have lost money on this thing" and "I owe more because I sold this thing". By a house (debt-free) for $100, and, say, tax of $1. Something happens for a decade, so it's worth $1000, tax of $10 per year for 10 years; $90 is deferred. Later, thing un-happens and more, now house is worth $60, with $90 in deferred tax, so if you sell it... you end up owing $30, for a net loss of $70, instead of the $50 in loss on the asset? ...or is there something I'm getting really, really wrong? Seems simpler (and safer) to say property tax doesn't change (instead of accumulating interest-free debt), and profit from selling is capital gains, but I know jack shit about this stuff and am willing to be wrong.

deleted 7y ago

[deleted]