4 ms·

This is why prop 13 was passed in California. https://en.m.wikipedia.org/wiki/1978_California_Proposition_13 https://en.m.wikipedia.org/wiki/1978_California_Pr

This is why prop 13 was passed in California. https://en.m.wikipedia.org/wiki/1978_California_Proposition_13 https://en.m.wikipedia.org/wiki/1978_California_Proposition_...

vinyl7 4y ago
...and is the reason why California is unaffordable
- downsidesabound 4y ago
  Both true! I wonder if you could have one without the other? (Serious question.)
- azemetre 4y ago
  It may explain California to you but it doesn’t explain markets in other cities like Denver, Austin, or Phoenix. Everything is expensive because housing supply is artificially constrained.
  - bradknowles 4y ago
    In Texas, if the house is your primary or "homestead" residence, then if the value of the property goes up by a factor of 2x in a year, then your assessed property taxes will only go up by 10% for that year. And 10% the year after, and the year after, and so on and so on, until the assessed tax value matches the property value (which will also presumably continue to increase, but maybe not by 2x every year). So, typically the tax authorities will asses your home value one year and increase that, then your land value the next year and increase that, and the switch back to the home value for the third year, and just keep switching back and forth, and meanwhile pushing against that 10% limit as hard as they can every year. But you do have to make sure that you get that "homestead" declaration filed correctly. There are a number of ambulance-chaser type law firms in Texas that specialize in fighting tax assessments that increase by too much, and many of them work by taking the deal for free and then they'll split the savings with you if they win. Be careful who you choose in this space.
    - Siddarth1977 4y ago
      Characterizing the firms who defender homeowners from abusive hikes in their tax rates as being akin to "ambulance-chasers" seems completely backwards to me. My tax rates seem essentially fraudulent and designed to bleed me dry. My comparisons include houses twice as large, in better school districts, with views, with pools, etc. The firms who help protect me from getting robbed by this bureaucratic exploitation are more akin to an honorable defense attorney protecting a wrongfully accused victim. And of course, the whole notion of increasing property taxes is absurd. The government budget for next year should be roughly the same as this year. If house prices went up 10% that doesn't mean that the entire state government budget went up 10%.
      - bradknowles 4y ago
        They spam everyone in the state, and there are dozens of such firms. If you saw the spammy mailings they put out, you'd see why I see them as equivalent to ambulance chasers. Yes, they perform a service, and I'm sure some of them are appreciated by some of their clients -- just like ambulance chasers. My wife also happens to be a lawyer, and her opinion of them is lower than mine.
  - andbberger 4y ago
    prop 13 might not be the root of all evil, but they're definitely bedfellows
    - treeman79 4y ago
      No. Excessive spending is the major problem. They would spend 100% of all income / revenue if they could. And still complain it isn’t enough.
      - azemetre 4y ago
        What do you mean by excessive spending? Is this the same California that has a $97 billion budget surplus? [1] I honestly don't know what you're getting out outside of snide political commentary. [1] https://www.nytimes.com/2022/05/13/us/california-budget-surplus.html https://www.nytimes.com/2022/05/13/us/california-budget-surp...
- hemreldop 4y ago
jdhn 4y ago
Not sure why you're getting downvotes, you're 100% correct. As an outside observer into the Wild West that is California real estate, part of me wants to see Prop 13 repealed just to see what would happen. Personally, I think the only thing that would change would be property tax valuations as I believe that the effect it's had on building houses is virtually nil.
LudwigNagasena 4y ago
It’s unfortunate that instead of coming up with something at least a bit more sensible, they chose such an awful measure.
- cycrutchfield 4y ago
  Because California allows direct democracy for their ballot proposition process and people will ultimately just vote for policies that are maximally destructive as long as it reduces their local costs.
listenallyall 4y ago
Caps on property tax, and tax deductions for mortgage interest payments, and not taxing appreciation on a home sale, are very simply, juicy tax breaks for rich people. Not saying everyone who owns a home is rich, but, as a group, they are far wealthier than the collective group of renters. It is impossible to defend these programs, and also complain about inequality, rich not paying their "fair share", whatever. Anyone who does so -- Bernie, E. Warren -- is a hypocrite.
- anamax 4y ago
  Prop 13 keeps California's property tax revenues stable. This is especially true/important when property values crash, as they do every 10 years or so. (It's starting now as people start to realize that mortgages are going up from 5%, not down.) Why? Because all of the people who bought more than a couple of years ago will see their regular 2% increase because the crash didn't hit their property's value. Meanwhile, newer homeowners will go to the assessor and get a reduction in value, which reduces their taxes. The former outweighs the latter.
- masonic 4y ago
  >not taxing appreciation on a home sale That's what capital gains taxation captures.
  - sokoloff 4y ago
    There is an exclusion amount for personal residence where capital gains are taxed at 0% federally. It’s $500K for married couples at the moment. That is likely what GP was commenting on with that clause. https://www.irs.gov/taxtopics/tc701 https://www.irs.gov/taxtopics/tc701
  - listenallyall 4y ago
    No, not really, as sokoloff stated, there is an exemption from capital gains tax on a primary residence up to a half-million in appreciation.
- bojangleslover 4y ago
  Yeah well luckily those same folks are paying close to or sometimes beyond 50% in income tax

This is why prop 13 was passed in California. https://en.m.wikipedia.org/wiki/1978_California_Proposition_13 https://en.m.wikipedia.org/wiki/1978_California_Proposition_...

vinyl7 4y ago

...and is the reason why California is unaffordable

downsidesabound 4y ago
Both true! I wonder if you could have one without the other? (Serious question.)
azemetre 4y ago
It may explain California to you but it doesn’t explain markets in other cities like Denver, Austin, or Phoenix. Everything is expensive because housing supply is artificially constrained.
- bradknowles 4y ago
  In Texas, if the house is your primary or "homestead" residence, then if the value of the property goes up by a factor of 2x in a year, then your assessed property taxes will only go up by 10% for that year. And 10% the year after, and the year after, and so on and so on, until the assessed tax value matches the property value (which will also presumably continue to increase, but maybe not by 2x every year). So, typically the tax authorities will asses your home value one year and increase that, then your land value the next year and increase that, and the switch back to the home value for the third year, and just keep switching back and forth, and meanwhile pushing against that 10% limit as hard as they can every year. But you do have to make sure that you get that "homestead" declaration filed correctly. There are a number of ambulance-chaser type law firms in Texas that specialize in fighting tax assessments that increase by too much, and many of them work by taking the deal for free and then they'll split the savings with you if they win. Be careful who you choose in this space.
  - Siddarth1977 4y ago
    Characterizing the firms who defender homeowners from abusive hikes in their tax rates as being akin to "ambulance-chasers" seems completely backwards to me. My tax rates seem essentially fraudulent and designed to bleed me dry. My comparisons include houses twice as large, in better school districts, with views, with pools, etc. The firms who help protect me from getting robbed by this bureaucratic exploitation are more akin to an honorable defense attorney protecting a wrongfully accused victim. And of course, the whole notion of increasing property taxes is absurd. The government budget for next year should be roughly the same as this year. If house prices went up 10% that doesn't mean that the entire state government budget went up 10%.
    - bradknowles 4y ago
      They spam everyone in the state, and there are dozens of such firms. If you saw the spammy mailings they put out, you'd see why I see them as equivalent to ambulance chasers. Yes, they perform a service, and I'm sure some of them are appreciated by some of their clients -- just like ambulance chasers. My wife also happens to be a lawyer, and her opinion of them is lower than mine.
- andbberger 4y ago
  prop 13 might not be the root of all evil, but they're definitely bedfellows
  - treeman79 4y ago
    No. Excessive spending is the major problem. They would spend 100% of all income / revenue if they could. And still complain it isn’t enough.
    - azemetre 4y ago
      What do you mean by excessive spending? Is this the same California that has a $97 billion budget surplus? [1] I honestly don't know what you're getting out outside of snide political commentary. [1] https://www.nytimes.com/2022/05/13/us/california-budget-surplus.html https://www.nytimes.com/2022/05/13/us/california-budget-surp...
hemreldop 4y ago

jdhn 4y ago

Not sure why you're getting downvotes, you're 100% correct. As an outside observer into the Wild West that is California real estate, part of me wants to see Prop 13 repealed just to see what would happen. Personally, I think the only thing that would change would be property tax valuations as I believe that the effect it's had on building houses is virtually nil.

LudwigNagasena 4y ago

It’s unfortunate that instead of coming up with something at least a bit more sensible, they chose such an awful measure.

cycrutchfield 4y ago
Because California allows direct democracy for their ballot proposition process and people will ultimately just vote for policies that are maximally destructive as long as it reduces their local costs.

listenallyall 4y ago

Caps on property tax, and tax deductions for mortgage interest payments, and not taxing appreciation on a home sale, are very simply, juicy tax breaks for rich people. Not saying everyone who owns a home is rich, but, as a group, they are far wealthier than the collective group of renters. It is impossible to defend these programs, and also complain about inequality, rich not paying their "fair share", whatever. Anyone who does so -- Bernie, E. Warren -- is a hypocrite.

anamax 4y ago
Prop 13 keeps California's property tax revenues stable. This is especially true/important when property values crash, as they do every 10 years or so. (It's starting now as people start to realize that mortgages are going up from 5%, not down.) Why? Because all of the people who bought more than a couple of years ago will see their regular 2% increase because the crash didn't hit their property's value. Meanwhile, newer homeowners will go to the assessor and get a reduction in value, which reduces their taxes. The former outweighs the latter.
masonic 4y ago
>not taxing appreciation on a home sale That's what capital gains taxation captures.
- sokoloff 4y ago
  There is an exclusion amount for personal residence where capital gains are taxed at 0% federally. It’s $500K for married couples at the moment. That is likely what GP was commenting on with that clause. https://www.irs.gov/taxtopics/tc701 https://www.irs.gov/taxtopics/tc701
- listenallyall 4y ago
  No, not really, as sokoloff stated, there is an exemption from capital gains tax on a primary residence up to a half-million in appreciation.
bojangleslover 4y ago
Yeah well luckily those same folks are paying close to or sometimes beyond 50% in income tax