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The way this article frames paying property taxes for your home at market valuation as an "effective inheritance tax" even though you can get a MILLION dollars

by verall 3y ago

The way this article frames paying property taxes for your home at market valuation as an "effective inheritance tax" even though you can get a MILLION dollars in value exempted by living their as your primary residence for 1 measly year after inheriting the property really elucidates the issues with housing and property taxes in California.

ZeroGravitas 3y ago
To be fair to the analogy, most "inheritance taxes", while demonised relentlessly by certain groups, also have exemptions that other people would consider a lottery win.
happytiger 3y ago
Absolutely. It’s so lost on the author that the property tax system is distorting valuations in the first place that they don’t even examine it.
jseliger 3y ago
I read this: “If three siblings inherit a $1.5 million house from their parents, and only one of them wants to keep it, she will have to buy out the other siblings’ share for $1 million, which reflects the high cost of housing in the Bay Area,” Alisjahbana said. “It’s often not possible to buy out the siblings’ shares, so in this situation it’s common to sell the house.” My heart really goes out to the unfortunate people who inherit $500,000. Compared to those of us who inherit $0, their situation is so tragic.
- tanseydavid 3y ago
  I don't think the article is asking for sympathy for anyone.
YeBanKo 3y ago
I know multiple people who inherited houses and has been sitting on it to avoid paying market-rate property tax. In my experience they also tend to be the shittiest landlords.
- secabeen 3y ago
  Prop 19 was written to stop this, and it's good public policy.
oceanplexian 3y ago
In California a $2M house can be a fixer-upper 1950s ranch in a lot of areas. Areas that were average, working class neighborhoods when they were built. The person is often inheriting their childhood home. But they should have to sell the family home to a transplant techie, pay tens, or hundreds of thousands of dollars in taxes to a rent-seeking government, leave and move to Bakersfield to something?
- thereisnospork 3y ago
  Yes. A person shouldn't be able to inherit approximately the median lifetime salary of an individual tax free because their parents happened to live in California. They've no more right to live anywhere than anyone else. If you want housing to be affordable, build housing until it is instead of trying to prop up pseudo feudualistic practices around hereditary land ownership to paper over the gross distinction of the housing market.
  - erkt 3y ago
    This is a wild take.
    - thereisnospork 3y ago
      Can you elaborate? Which part is 'wild'? That a person doesn't have a right to live where they'd like? This gets trotted out every time some might've been Californian complains about high housing costs. Or is it that inheritance should be taxed? Debatable I suppose but hardly 'wild'. The only problem I can see with the scenario is that the value on a 'fixer-upper 1950s ranch' is so high that the tax on it is beyond what an 'average working class' fellow or fellowette can reasonably expect to afford.
      - erkt 3y ago
        An individual doesn’t stand to inherit the equivalent of a life time or labor because “their parents happened to live in California”. They stand to inherit it because their parents worked hard their entire lives and invested an obscene amount in a desirable market. They probably made significant sacrifices to do this. Many of our families were here long before real estate started getting out of hand and contributed to building the economic machine that makes California so desirable today. Newcomers absolutely deserve to pay higher rent and mortgage rates to live in the same place. They always had the freedom to invest in their own state or country.
ctchocula 3y ago
+1 to this. A fair and balanced take is that Prop 13 is a massive redistribution program from renters to the landowning class in California. In an ironic twist, the people without property are subsidizing the people with property. This is exacerbating wealth inequality.

by verall 3y ago

ZeroGravitas 3y ago

To be fair to the analogy, most "inheritance taxes", while demonised relentlessly by certain groups, also have exemptions that other people would consider a lottery win.

happytiger 3y ago

Absolutely. It’s so lost on the author that the property tax system is distorting valuations in the first place that they don’t even examine it.

jseliger 3y ago

I read this: “If three siblings inherit a $1.5 million house from their parents, and only one of them wants to keep it, she will have to buy out the other siblings’ share for $1 million, which reflects the high cost of housing in the Bay Area,” Alisjahbana said. “It’s often not possible to buy out the siblings’ shares, so in this situation it’s common to sell the house.” My heart really goes out to the unfortunate people who inherit $500,000. Compared to those of us who inherit $0, their situation is so tragic.

tanseydavid 3y ago
I don't think the article is asking for sympathy for anyone.

YeBanKo 3y ago

I know multiple people who inherited houses and has been sitting on it to avoid paying market-rate property tax. In my experience they also tend to be the shittiest landlords.

secabeen 3y ago
Prop 19 was written to stop this, and it's good public policy.

oceanplexian 3y ago

In California a $2M house can be a fixer-upper 1950s ranch in a lot of areas. Areas that were average, working class neighborhoods when they were built. The person is often inheriting their childhood home. But they should have to sell the family home to a transplant techie, pay tens, or hundreds of thousands of dollars in taxes to a rent-seeking government, leave and move to Bakersfield to something?

thereisnospork 3y ago
Yes. A person shouldn't be able to inherit approximately the median lifetime salary of an individual tax free because their parents happened to live in California. They've no more right to live anywhere than anyone else. If you want housing to be affordable, build housing until it is instead of trying to prop up pseudo feudualistic practices around hereditary land ownership to paper over the gross distinction of the housing market.
- erkt 3y ago
  This is a wild take.
  - thereisnospork 3y ago
    Can you elaborate? Which part is 'wild'? That a person doesn't have a right to live where they'd like? This gets trotted out every time some might've been Californian complains about high housing costs. Or is it that inheritance should be taxed? Debatable I suppose but hardly 'wild'. The only problem I can see with the scenario is that the value on a 'fixer-upper 1950s ranch' is so high that the tax on it is beyond what an 'average working class' fellow or fellowette can reasonably expect to afford.
    - erkt 3y ago
      An individual doesn’t stand to inherit the equivalent of a life time or labor because “their parents happened to live in California”. They stand to inherit it because their parents worked hard their entire lives and invested an obscene amount in a desirable market. They probably made significant sacrifices to do this. Many of our families were here long before real estate started getting out of hand and contributed to building the economic machine that makes California so desirable today. Newcomers absolutely deserve to pay higher rent and mortgage rates to live in the same place. They always had the freedom to invest in their own state or country.

ctchocula 3y ago

+1 to this. A fair and balanced take is that Prop 13 is a massive redistribution program from renters to the landowning class in California. In an ironic twist, the people without property are subsidizing the people with property. This is exacerbating wealth inequality.