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> But in the 70s, voters voted themselves a massive permanent tax break that's even bigger for corporations. When an individual buy a property the tax basis get

> But in the 70s, voters voted themselves a massive permanent tax break that's even bigger for corporations. When an individual buy a property the tax basis gets reset and recalculated. Not if the property is held in an LLC. So Disney's property tax rates have essentially been frozen since the 1960s. Are people essentially selling the LLCs then, rather than the properties themselves?

saurik 4y ago
Yes. The LLCs are even often simply named after the street address, so stuff like 6243 Abrego LLC. The idea is then just whether you are making enough money off the asset to justify the minimum LLC tax vs. the property tax increase on an expected sale (which might be a good trade-off for everyone, but is certainly a good trade-off for people renting their property out).
- gaadd33 4y ago
  How does that work with the provision that if there is a change of control in the llc changes hands they need to reappraise? Do you just encapsulate the llc inside another one?
  - epistasis 4y ago
    It's a gradual change of possession over time, and each individual change of ownership is small to not trigger reassessment.
jmyeet 4y ago
Yes [1]. [1]: https://journal.firsttuesday.us/change-the-law-close-prop-13s-corporate-loophole/65104/#:~:text=Our%20proposal%3A%20Amend%20Proposition%2013,equitable%20share%20of%20local%20taxes https://journal.firsttuesday.us/change-the-law-close-prop-13....
- koolba 4y ago
  Wouldn’t a change in control of the LLC trickle down to a change in ownership of the property and thus trigger a reassessment?
  - mattnewton 4y ago
    In a sane system yes
  - labcomputer 4y ago
    It would in any sane system… which is to say, not in California. Here’s something to really blow your mind: After Prop 13 was passed, some subsequent Propositions made property tax rate inheritable. That’s right, your kids and grandkids can inherit your below-market property tax rate. We have come full circle and returned to the system of landed nobility (with special tax privileges) that a war was fought to leave.
    - secabeen 4y ago
      There's been some movement to repeal those provisions, and let me tell you, the Nextdoor Karens are very very unhappy that their kids aren't going to be able to live in their childhood home because they won't be able to afford the taxes.
      - epistasis 4y ago
        The funny thing is that they can keep the low tax rates if they live in the home!! The just can't rent it out and continue the low tax rates.
        reducesuffering 4y ago
        It’s primary home to primary home only and only $1m worth is prevented from being reassessed. $2m homes (majority in the Bay Area) will end up with new $1m assessed and pay $12.5k / year. Median taxes across the US are more like $5k / year.

saurik 4y ago

Yes. The LLCs are even often simply named after the street address, so stuff like 6243 Abrego LLC. The idea is then just whether you are making enough money off the asset to justify the minimum LLC tax vs. the property tax increase on an expected sale (which might be a good trade-off for everyone, but is certainly a good trade-off for people renting their property out).

gaadd33 4y ago
How does that work with the provision that if there is a change of control in the llc changes hands they need to reappraise? Do you just encapsulate the llc inside another one?
- epistasis 4y ago
  It's a gradual change of possession over time, and each individual change of ownership is small to not trigger reassessment.

jmyeet 4y ago

Yes [1]. [1]: https://journal.firsttuesday.us/change-the-law-close-prop-13s-corporate-loophole/65104/#:~:text=Our%20proposal%3A%20Amend%20Proposition%2013,equitable%20share%20of%20local%20taxes https://journal.firsttuesday.us/change-the-law-close-prop-13....

koolba 4y ago
Wouldn’t a change in control of the LLC trickle down to a change in ownership of the property and thus trigger a reassessment?
- mattnewton 4y ago
  In a sane system yes
- labcomputer 4y ago
  It would in any sane system… which is to say, not in California. Here’s something to really blow your mind: After Prop 13 was passed, some subsequent Propositions made property tax rate inheritable. That’s right, your kids and grandkids can inherit your below-market property tax rate. We have come full circle and returned to the system of landed nobility (with special tax privileges) that a war was fought to leave.
  - secabeen 4y ago
    There's been some movement to repeal those provisions, and let me tell you, the Nextdoor Karens are very very unhappy that their kids aren't going to be able to live in their childhood home because they won't be able to afford the taxes.
    - epistasis 4y ago
      The funny thing is that they can keep the low tax rates if they live in the home!! The just can't rent it out and continue the low tax rates.
      - reducesuffering 4y ago
        It’s primary home to primary home only and only $1m worth is prevented from being reassessed. $2m homes (majority in the Bay Area) will end up with new $1m assessed and pay $12.5k / year. Median taxes across the US are more like $5k / year.