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Yes, I can’t say this enough but a really great way to preserve wealth in CA is to (1) buy an expensive home with a low interest 30 year fixed loan, (2) live in

Yes, I can’t say this enough but a really great way to preserve wealth in CA is to (1) buy an expensive home with a low interest 30 year fixed loan, (2) live in said home as long as possible so you can pay roughly the same tax you did when you purchased the home. After 10 years in the home there’s only downsides to moving. I actually rented in SF from somebody whose grandparents bought the home I rented. The value of the 1800 sq/ft rental home was around $1.8m, but the landlord was paying property tax on the value of the home from when his grandparents bought the property in the 70’s. The tax bill should have been about $20k/year, but it was only a few thousand because the tax rate was locked into the value of the home in the 70’s. Meanwhile a neighbor bought a $3m home next door and was paying $35k in property tax. For me it meant I got a slight discount on rent. The whole thing is absurd.

theironhammer 4y ago
Agreed but property tax should not be based on the current value of the home. Property prices are insane. It's both unfair that the guy in the expensive home pays a huge amount in taxes as it is also unfair that the other guys property taxes are locked in to when property prices were less insane.
- bradgessler 4y ago
  In theory, yes, but in practice what happens is those people get priced out of their homes anyway. If a retired person was living in the $1.8m home in my example above and was paying a low tax based on the 1970's of the house, they might not be able to afford moving to a more practical $900k one-bedroom apartment/condo because their tax rate would increase and they may not have the cashflow to pay for that bill (even considering the proceeds from the sale of the home). If you walk through SF, even really nice neighborhoods like St. Franciswood, you'll see large beautiful homes that are in severe states of disrepair because the owners don't have the cashflow to pay for the enormous costs of repairing their homes. They'd be better off moving to a smaller dwelling, but they won't because it could cost more and the incentives are more out of whack.
- dantheman 4y ago
  The problem is that property is taxed as a percentage of it's value and as the value goes up the government just gets more money. Instead the government should set a goal of how much revenue it needs and as the property value goes up, the percentage rate drops.

theironhammer 4y ago

Agreed but property tax should not be based on the current value of the home. Property prices are insane. It's both unfair that the guy in the expensive home pays a huge amount in taxes as it is also unfair that the other guys property taxes are locked in to when property prices were less insane.

bradgessler 4y ago
In theory, yes, but in practice what happens is those people get priced out of their homes anyway. If a retired person was living in the $1.8m home in my example above and was paying a low tax based on the 1970's of the house, they might not be able to afford moving to a more practical $900k one-bedroom apartment/condo because their tax rate would increase and they may not have the cashflow to pay for that bill (even considering the proceeds from the sale of the home). If you walk through SF, even really nice neighborhoods like St. Franciswood, you'll see large beautiful homes that are in severe states of disrepair because the owners don't have the cashflow to pay for the enormous costs of repairing their homes. They'd be better off moving to a smaller dwelling, but they won't because it could cost more and the incentives are more out of whack.
dantheman 4y ago
The problem is that property is taxed as a percentage of it's value and as the value goes up the government just gets more money. Instead the government should set a goal of how much revenue it needs and as the property value goes up, the percentage rate drops.