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Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that. If you don't want to pay them, sell the house for a huge profit and leave

Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that. If you don't want to pay them, sell the house for a huge profit and leave. If you do want to pay your fair share and continue to live there, take out a second mortgage. We're talking about millionaires, not vulnerable victims.

zepto 6y ago
> Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that. That’s not how property taxes work. You pay them whether you make money on the house or not. You only make money on a house when you sell it. > We're talking about millionaires, not vulnerable victims. This makes no sense. Buying or owning a house doesn’t make you a millionaire. Most people take out large loans to do so, and generally their net worth goes down at the point when they do so because of the costs. Purchase prices may go up, but they also go down when the economy weakens.
- caturopath 6y ago
  I don't know why you think value doesn't exist until a transaction. Nonetheless, people are welcome to contest the price if it's wrong and they're welcome to sell the house and leave if they don't want to pay the tax. They're actually welcome to stay and have a lien on their house: if you're living there you aren't going to have it taken away for a property tax lien. (If they will where you are, they can fix that in the same bill that repeals property tax distortions.) > Buying or owning a house doesn’t make you a millionaire. I'm focusing on the millions of houses in California that have went up in value by huge amounts since the last market snapshot for the tax basis whose owners are millionaires.
  - pwg 6y ago
    > if you're living there you aren't going to have it taken away for a property tax lien. I don't know if that is true for CA, but in some localities, you most certainly will, eventually, be evicted from your own property for a property tax lien. It will take quite some time for the court case to wind its way to completion, but eventually the Sheriff will show up one day with an eviction notice and forcibly remove you from the property.
  - zepto 6y ago
    > I don't know why you think value doesn't exist until a transaction. Value is determined by what the market actually pays, not by someone’s model of what it would pay. That isn’t the value - that is an estimate of what someone would receive if and only if they sell at that moment. Contesting an estimate doesn’t change that. Whenever prices fall, do you propose paying cash to homeowners to reimburse them for all of the overpaid taxes? Forcing someone to take a loan on a volatile asset that they can’t sell without losing their home is a brutal policy. > I'm focusing on the millions of houses in California that have went up in value by huge amounts since the last market snapshot for the tax basis whose owners are millionaires. Ok - so you just don’t care how many other people get hurt or displaced as long as you get to take money from some millionaires?
    - deleted 6y ago
      [deleted]
- pwg 6y ago
  > > Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that. > That’s not how property taxes work. You pay them whether you make money on the house or not. > You only make money on a house when you sell it. You are correct in that you do not (yet) have cash in hand from the value increase of the property. So if one defines "make money" as "have cash in hand", no money is made until one sells the property. But, what one does have in this situation is an unrealized capital gain. And if one defines "make money" to include unrealized capital gains, then the homeowner has "made money" -- they just do not yet have cash in hand.
  - zepto 6y ago
    > unrealized capital gain Unrealized is the operative word here. It means not achieved or created. An unrealized capital gain can become an unrealized loss. That’s because it’s not a real gain. Leveraging unrealized gains through loans is universally recognized as a risky investment strategy. This policy would force people to take on this risk. Which is exactly the point I’m making. Homeowners shouldn’t be forced to take on risky financial instruments that are tied to the performance of local businesses.
  - lotsofpulp 6y ago
    In a discussion about paying property taxes, which must be done with cash, what purpose would it serve to define unrealized capital gains as “make money”?
8ytecoder 6y ago
At a tax rate of 1.3% the jump in monthly taxes for a house valued at 400k to 1.2M is about $433 to $1300. It's not nothing but it's also backed by a house that's now worth $800,000 more - allowing them to take a second mortgage or a HELOC. In no way am I dismissing the concerns here. It probably affects some people more than others and we can talk about specific targeted exclusions. Right now, even the proposal to eliminate this for commercial buildings was rejected. Like rent control, this is indiscriminate welfare. Qualified welfare reaches the people who need it the most.
- gowld 6y ago
  "qualified welfare" doesn't reach people who can't navigate the bureaucracy.
  - caturopath 6y ago
    Aiming it at the people who have made lots of money is the worst of all worlds.
    - zepto 6y ago
      Prop 13 benefits everyone who owns property. It is not aimed at people who have made lots of money.
      - caturopath 6y ago
        Only in the sense that food stamps benefit everyone with kids and medicaid benefits everyone with a body. Is that what you mean, you're valuing prop 13 as a potentially-out-of-the-money option / a safetynet? The people who are actually receiving the value of the benefit for prop 13 are those who have made lots of money on their house -- the more money they've made, the more benefit they get.
        zepto 6y ago
        My point is that just from the outset, property taxes are a tax that transfers wealth from those who own property to those who do not. All property taxes are always a transfer from property owners to everyone else. Prop 13 or no Prop 13 this is true. So then when we’re talking about Prop 13, we are talking about a putative transfer only between property owners - long-standing vs recent. When I say that it’s also not a transfer, what I mean is that anyone who holds property will end up with the same relative gain over time. This of course assumes that prices continue to rise. If they don’t then these schemes to tax people on unrealized gains fail too.
hindsightbias 6y ago
Millions of Californians are millionaires on paper because they bought their house 30 years ago and held onto it. Millions of them are also retired or on SS and if they had to pay market value property taxes they would be not be able to. Take a huge profit and leave, for where? You've lived somewhere most of your life and should be kicked to Stockton? For some reason I hear Tom Selleck's voice talking about reverse mortgages. There's a winner for public policy.
- caturopath 6y ago
  They would have options like 1. Move 2. Take out a loan 3. Take in a boarder 4. Refuse to pay and know they will not be evicted for their lien (this could be codified statewide if this were the real problem) I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there.
  - zepto 6y ago
    > I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there. I don’t know why anyone would think that they are.
  - hindsightbias 6y ago
    The median valuation in Stockton would be $350K. Your poorer 1/3rd millionaires will be screwed also. Which is pretty much everyone in CA who has owned for 10 years. I guess they can all move to trailer parks in the Mojave and make way for the real millionaires.
  - souprock 6y ago
    My "millionaire" grandma in the middle of San Francisco would literally die from those options. She is fragile due to age. Her house is familiar to her. Familiarity reduces stress, confusion, and accidents. She is close to family. She will die soon enough. You can wait. Better yet, you can do what she did many decades ago. Get a house built on undesirable land, then be part of a community that makes the value go up. The home you now covet is only valuable because of people like her. Nothing stops you from doing likewise. Pick some crummy land out in Mississippi or West Virginia and create a community.
majormajor 6y ago
> Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. That's not true. You have only made money on the house when you sell it. Should we force people to sell their own houses because other people have more money than them? I don't think "if you have enough money you can push others out" is great policy.

zepto 6y ago

> Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that. That’s not how property taxes work. You pay them whether you make money on the house or not. You only make money on a house when you sell it. > We're talking about millionaires, not vulnerable victims. This makes no sense. Buying or owning a house doesn’t make you a millionaire. Most people take out large loans to do so, and generally their net worth goes down at the point when they do so because of the costs. Purchase prices may go up, but they also go down when the economy weakens.

caturopath 6y ago
I don't know why you think value doesn't exist until a transaction. Nonetheless, people are welcome to contest the price if it's wrong and they're welcome to sell the house and leave if they don't want to pay the tax. They're actually welcome to stay and have a lien on their house: if you're living there you aren't going to have it taken away for a property tax lien. (If they will where you are, they can fix that in the same bill that repeals property tax distortions.) > Buying or owning a house doesn’t make you a millionaire. I'm focusing on the millions of houses in California that have went up in value by huge amounts since the last market snapshot for the tax basis whose owners are millionaires.
- pwg 6y ago
  > if you're living there you aren't going to have it taken away for a property tax lien. I don't know if that is true for CA, but in some localities, you most certainly will, eventually, be evicted from your own property for a property tax lien. It will take quite some time for the court case to wind its way to completion, but eventually the Sheriff will show up one day with an eviction notice and forcibly remove you from the property.
- zepto 6y ago
  > I don't know why you think value doesn't exist until a transaction. Value is determined by what the market actually pays, not by someone’s model of what it would pay. That isn’t the value - that is an estimate of what someone would receive if and only if they sell at that moment. Contesting an estimate doesn’t change that. Whenever prices fall, do you propose paying cash to homeowners to reimburse them for all of the overpaid taxes? Forcing someone to take a loan on a volatile asset that they can’t sell without losing their home is a brutal policy. > I'm focusing on the millions of houses in California that have went up in value by huge amounts since the last market snapshot for the tax basis whose owners are millionaires. Ok - so you just don’t care how many other people get hurt or displaced as long as you get to take money from some millionaires?
  - deleted 6y ago
    [deleted]
pwg 6y ago
> > Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that. > That’s not how property taxes work. You pay them whether you make money on the house or not. > You only make money on a house when you sell it. You are correct in that you do not (yet) have cash in hand from the value increase of the property. So if one defines "make money" as "have cash in hand", no money is made until one sells the property. But, what one does have in this situation is an unrealized capital gain. And if one defines "make money" to include unrealized capital gains, then the homeowner has "made money" -- they just do not yet have cash in hand.
- zepto 6y ago
  > unrealized capital gain Unrealized is the operative word here. It means not achieved or created. An unrealized capital gain can become an unrealized loss. That’s because it’s not a real gain. Leveraging unrealized gains through loans is universally recognized as a risky investment strategy. This policy would force people to take on this risk. Which is exactly the point I’m making. Homeowners shouldn’t be forced to take on risky financial instruments that are tied to the performance of local businesses.
- lotsofpulp 6y ago
  In a discussion about paying property taxes, which must be done with cash, what purpose would it serve to define unrealized capital gains as “make money”?

8ytecoder 6y ago

At a tax rate of 1.3% the jump in monthly taxes for a house valued at 400k to 1.2M is about $433 to $1300. It's not nothing but it's also backed by a house that's now worth $800,000 more - allowing them to take a second mortgage or a HELOC. In no way am I dismissing the concerns here. It probably affects some people more than others and we can talk about specific targeted exclusions. Right now, even the proposal to eliminate this for commercial buildings was rejected. Like rent control, this is indiscriminate welfare. Qualified welfare reaches the people who need it the most.

gowld 6y ago
"qualified welfare" doesn't reach people who can't navigate the bureaucracy.
- caturopath 6y ago
  Aiming it at the people who have made lots of money is the worst of all worlds.
  - zepto 6y ago
    Prop 13 benefits everyone who owns property. It is not aimed at people who have made lots of money.
    - caturopath 6y ago
      Only in the sense that food stamps benefit everyone with kids and medicaid benefits everyone with a body. Is that what you mean, you're valuing prop 13 as a potentially-out-of-the-money option / a safetynet? The people who are actually receiving the value of the benefit for prop 13 are those who have made lots of money on their house -- the more money they've made, the more benefit they get.
      - zepto 6y ago
        My point is that just from the outset, property taxes are a tax that transfers wealth from those who own property to those who do not. All property taxes are always a transfer from property owners to everyone else. Prop 13 or no Prop 13 this is true. So then when we’re talking about Prop 13, we are talking about a putative transfer only between property owners - long-standing vs recent. When I say that it’s also not a transfer, what I mean is that anyone who holds property will end up with the same relative gain over time. This of course assumes that prices continue to rise. If they don’t then these schemes to tax people on unrealized gains fail too.

hindsightbias 6y ago

Millions of Californians are millionaires on paper because they bought their house 30 years ago and held onto it. Millions of them are also retired or on SS and if they had to pay market value property taxes they would be not be able to. Take a huge profit and leave, for where? You've lived somewhere most of your life and should be kicked to Stockton? For some reason I hear Tom Selleck's voice talking about reverse mortgages. There's a winner for public policy.

caturopath 6y ago
They would have options like 1. Move 2. Take out a loan 3. Take in a boarder 4. Refuse to pay and know they will not be evicted for their lien (this could be codified statewide if this were the real problem) I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there.
- zepto 6y ago
  > I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there. I don’t know why anyone would think that they are.
- hindsightbias 6y ago
  The median valuation in Stockton would be $350K. Your poorer 1/3rd millionaires will be screwed also. Which is pretty much everyone in CA who has owned for 10 years. I guess they can all move to trailer parks in the Mojave and make way for the real millionaires.
- souprock 6y ago
  My "millionaire" grandma in the middle of San Francisco would literally die from those options. She is fragile due to age. Her house is familiar to her. Familiarity reduces stress, confusion, and accidents. She is close to family. She will die soon enough. You can wait. Better yet, you can do what she did many decades ago. Get a house built on undesirable land, then be part of a community that makes the value go up. The home you now covet is only valuable because of people like her. Nothing stops you from doing likewise. Pick some crummy land out in Mississippi or West Virginia and create a community.

majormajor 6y ago

> Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. That's not true. You have only made money on the house when you sell it. Should we force people to sell their own houses because other people have more money than them? I don't think "if you have enough money you can push others out" is great policy.