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The way I understand it... If Alice owns land and sells to Bob with some restrictions, that means Alice is still maintaining some ownership of the land. And th
by derekp7 2y ago
The way I understand it... If Alice owns land and sells to Bob with some restrictions, that means Alice is still maintaining some ownership of the land. And the price that Bob pays is discounted from the otherwise fair market value, because it has those restrictions on it.
Then, if Bob sells it to Charlie, Alice still has an ownership stake (logically speaking) from the restrictions (whether it is land use, or mineral rights, or whatever). That is what keeps Charlie bound by those same restrictions. And again, the land isn't worth as much to Charlie as unrestricted land would be.
Now since Alice still has what could be considered ownership in the land (via the restrictions), then Alice should be paying some property tax based on that value she is retaining. And since taxes can be assessed based on the nature of how the property is used (such as granting a homestead exemption/discount for example), then if the current situation isn't benefiting the county or city, they can redefine their tax code to raise the portion that Alice would have to pay based on the ownership type.
I understand that the above is an ideal situation, and if Alice isn't getting a tax bill then that should probably be addressed by the local government.
- rcstank 2y agoAlice is not maintaining ownership of the land at all once it is sold to Bob. She owns specific rights separate from the ownership of the land.
- derekp7 2y agoWhat is property ownership, really? Isn't it the exclusive right to do things with that property, and exclude random others from it? You buy a standard city lot, you have the right to build a house on it and to keep others off your property. If Alice still has some say over what can be done with a property, even if it is through a contract with Bob, then how is Alice able to tell Charlie what he can do with the property once Bob sells it to Charlie? When Charlie never signed any paperwork with Alice? That sounds like something that comes with still having some level of ownership, even if the law that enables the restrictions to be enforced don't word it that way. And that is where I'm saying that the county can write into the tax law that this type of control is taxable with property tax (because even if it isn't technically ownership of the land, the right of enforcing the restrictions is still something that Alice owns). I'd also like to see taxes on property that is underutilized (for the zoning that it is in). For example, some landlords would prefer to not rent out units rather than lower the rent to market rates (either housing or storefront properties), contributing to a constrained supply. If property taxes are raised on a unit that is unoccupied for a specific length of time, that would encourage the owner to rent it out at what the market is willing to pay instead of artificially keeping the rent higher and therefore the building empty.
- sooheon 2y agoThis is a distinction without a difference if those rights constrain what can be done with the land.
- ttyprintk 2y agoShe has a good posture in court; or in mediation or arbitration. That’s all. The deed restriction might grant her hunting privileges, but she can’t cut a lock.
- s1artibartfast 2y agoI don't buy your property tax rationale. You would end up with people paying property tax for their gym memberships and apartment rentals. Those too are contractual encumbrances that would impact a buyer
- sooheon 2y ago> You would end up with people paying property tax for their gym memberships and apartment rentals. Economic theory on tax incidence says otherwise. Land, being inelastic, takes the tax burden. Land tax cannot be passed on to tenants or businesses.
- s1artibartfast 2y ago>Land tax cannot be passed on to tenants or businesses. Correct, and the parent post is proposing taxes on things other than the land itself. If I sell rights to hike across my private property, or make a contract with nature conservancy not to chop down my trees, I still have the land (and pay taxes). To make the nature conservancy pay property taxes as well for contract rights they own is just like having a tenant pay for private use of my house, or a consumer for a shared access right to my gym.
- deleted 2y ago[deleted]
- sooheon 2y agoGotcha. A tax on the land itself will sort out these underutilization incentives.