9 ms·

Give me a moment while I play sad songs on this tiny violin for old people who are sitting on valuable assets. tiny violin songs, very sad OK then, let's talk

Give me a moment while I play sad songs on this tiny violin for old people who are sitting on valuable assets. tiny violin songs, very sad OK then, let's talk about reality. Letting incumbents under-utilize valuable real estate is a bad policy. Anyway nobody gets thrown out of their house for owing property taxes in California because the local authorities just put liens on the property. Once the old folks kick the bucket, the local govt collects on their lien from the heirs or buyers. There are also several other non-old-people-getting-evicted problems with Prop 13 and its siblings. There certainly is not any excuse for the ability to pass your property tax assessment on to your children or grandchildren.

MRSallee 13y ago
> Letting incumbents under-utilize valuable real estate is a bad policy. If the value of the property increases, there is incentive for owners to sell. If a developer wants to "utilize valuable real estate," is it not better that they make an offer and that people have choice in what happens to their property, rather forcing out "incumbents" with no choice due to escalating tax costs? Buying a house with potentially wild inflation of tax costs is about as attractive as buying a house with a variable APR.
- muzz 13y ago
  > If the value of the property increases, there is incentive for owners to sell. Prop 13 counter-acts the incentive given by market appreciation of the value. The value may go up according to the market, but the owner's taxes are capped. This is an incentive to stay, as an owner would face higher taxes and thus higher costs if they simply moved to an identically-priced home.
  - vonmoltke 13y ago
    Florida recently solved that problem by making homestead caps transferrable after a certain period of time.
    - thrownaway2424 13y ago
      This has been possible for decades in California under a later proposition. People over age 55 (iirc) can transfer their assessment to a property of same or less value within or between participating counties. Not all counties participate but several populous counties do (including Alameda).
      - muzz 13y ago
        Only 9 counties participate in inter-county transfers http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1 http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1 And as you point out, if you are under 55 then none of this applies.
  - jasonlotito 13y ago
    > The value may go up according to the market, but the owner's taxes are capped. So, the value according the market is not accurate. The value is actually higher. The problem isn't the laws. The problem is the market simply doesn't want to pay an appropriate amount for the person's property.
    - dragonwriter 13y ago
      > So, the value according the market is not accurate. I'm not sure how a market value can be inaccurate, that implies that there is some objectively correct non-market value that you could meeasure the market value against, which is an odd idea. What Prop 13's limit on assessment increases does is (in terms of the forces that drive market prices) is decrease supply (because it increases the value of homes to people who already own them, by decreasing the cost -- in property taxes -- paid compared to the utility derived from holding the property), which, considered on its own, increases market clearing price. It may also increase demand (since it also decreases long-term expected costs for new buyers), but probably more weakly than it increases supply (since the decreased cost is already being realized by sellers -- and more strongly the longer they have held the whome -- wherease it will take several years for the decreased cost to be realized by a new buyer, since purchase events trigger assessment at full value.) > The problem isn't the laws. The problem is the market simply doesn't want to pay an appropriate amount for the person's property. The law adds non-transferrable value (or, less simply, provides a non-transferrable abatement of cost) as long as the owner holds the property. This creates an externally-imposed difference in the value to the owner and the value to other market participants.
- bradleyjg 13y ago
  > Buying a house with potentially wild inflation of tax costs is about as attractive as buying a house with a variable APR. The one and only reason the US has 30 year fixed rate mortgages, with no prepayment penalty, available levered 5-10x, all at less than 100 bps over the risk free rate is because of massive government implicit and explicit subsidies. Absent distortions it doesn't make sense for most people to buy a house -- it's inherently non-diversified, low liquidity, high transaction costs. But American society has for some bizarre reason decided that home ownership is the sine qua non of human civilization and so every level of government intervenes to distort the market in favor of homeownership. Instead of recognizing this extraordinary intervention, and perhaps being grateful, homeowners tend to either: 1) refuse to recognize that such massive subsidies exist, or 2) see as entirely natural -- and bitch and moan if even the slightest modification is proposed. It's yet another example of the American phenomenon of socialism for me but not for thee (and none dare call it welfare).
  - encoderer 13y ago
    On the contrary, Fed and Census data indicates that the net worth of the average homeowner is 30x greater than renters. Part of this is certainly some selection bias. More wealthy people buy homes. But it's more than that. The truth is, buying a home is the only form of investing on margin for most. Also, it's compulsory investment and savings -- both with the principal payment and in the form of property improvements. Finally, of course, are the myriad tax benefits. While it's true that we incentivize home ownership, possibly too much, I think it's unfair that you paint it as an otherwise neutral activity that we strangely endorse with public policy. Land has real value, you can live on (and off) it. It was long seen as the one enduring source of wealth (See John Adams, George Washington, etc). It's much deeper than our postwar tax policies.
    - deleted 13y ago
      [deleted]
    - ahomescu1 13y ago
      > The truth is, buying a home is the only form of investing on margin for most. Also, it's compulsory investment and savings -- both with the principal payment and in the form of property improvements. I find it weird that people look at houses as "investments". For an asset to be an investment for me, it has to be productive. Buying stock in a company or starting your own is productive; buying farm land is productive (you can use it to produce food). A house in itself doesn't produce anything, it's just an asset. If you're relying on buying it cheap and selling it at a high price, that's speculation, not investment (that house still hasn't produced anything, it just happens to be more valued by other people).
rsync 13y ago
You realize prop 13 is a statewide policy, not just a north beach community standard, right ? So while you're thinking of (and playing violins for) a certain sect that you know well here in the cosmopolitan city, there are also hundreds of thousands of "99 percenter" property owners throughout California that really do hurt as they scrape to make ends meet with the major (and usually only) asset they will ever own.
- _delirium 13y ago
  One half-fix sometimes proposed to solve the most egregious Prop 13 issues but leave it in place for the people you're talking about is to limit it to only owner-occupied primary residences. As it stands today, Prop 13 applies to not only homes people actually live in, but also investment property, vacation homes, even commercial real-estate. Imo any "protect the nature of our community" / "keep old people from being displaced" type justification makes a lot less sense when we're talking about Intel's property taxes, or about property held by real-estate investment trusts.
  - zenbowman 13y ago
    I think this is far more reasonable.
- r00fus 13y ago
  Solution: Split Roll [1]. It would prevent egregious abuses of prop13 like the transfer of ownership coordinated for Ernest & Julio Gallo winery [2], wherein a sweetheart tax valuation on property was transferred to a new owner without triggering a tax re-evaluation, while removing any impact for 99 percenters (and even some of the 1%). [1] http://articles.latimes.com/2009/jul/13/business/fi-hiltzik13 http://articles.latimes.com/2009/jul/13/business/fi-hiltzik1... [2] http://www.car.org/meetings/carmeetings/committee-materials-archive/2013spring/tgf513/ibpsplt513 http://www.car.org/meetings/carmeetings/committee-materials-...
genericuser9999 13y ago
>...Anyway nobody gets thrown out of their house for owing property taxes in California because the local authorities just put liens on the property. Who are you kidding? You get a lien on the house and then that is used to force a sale to cover the amount due. Hell even home owner associations do it all the time if you don't pay your monthly dues for several months.
- ScottBurson 13y ago
  So the solution, as 'raldi insightfully suggests, is simply not to consider the lien due and payable until the house is sold. I'm not enough of a lawyer to know exactly how that should be structured, but it's a great solution.
  - smsm42 13y ago
    This would make underwater mortgage holders (at least lower-income ones) to stop paying taxes completely. After all, they've already lost their money, and have no hope of getting anything out of the sale, and there's no way anybody gets anything more out of them, it's bank's loss now. Moreover, it is in their interest to postpone the sale - since until sold, bank's incentive in eviction is much lower, and incentive in just discharging the part of the mortgage is higher, due to additional buyer costs. So if you shift the tax burden essentially to the buyer of the house, the consequences may be not that good.
    - ScottBurson 13y ago
      The property owner would still be liable for annual tax payments on the assessed value of the property. When that is falling, the Prop. 13 limitation has no effect. The lien we're talking about would be on the difference between the tax paid under Prop. 13 and the tax that would be due if there were no Prop. 13. If the mortgage is underwater, that difference is zero.
- dang 13y ago
  > Who are you kidding? Please don't address other users this way on Hacker News. Civility is important here. The comment is otherwise substantive and would be a fine one if that bit were simply deleted.
zenbowman 13y ago
This is a pretty inhumane way of looking at property. It's not just about optimization of real estate, when people buy a home, they plan their lives around it. They raise their children in it. There's a huge emotional investment in our home, that is part of being human. Property tax caps are perfectly fine. As a homeowner, I will always vote down ANY increase in property tax. Your mentality values economic optimization over human optimization, and it is one that I reject.
- thrownaway2424 13y ago
  Sure, everything you say is true, but only for a narrow slice of the real estate market. Did Intel raise their children in their HQ building? No, but their property taxes are protected by Prop 13.
  - zenbowman 13y ago
    We invest a lot emotionally in our businesses too, but yes, at most we'd have to make those taxes conditional. But then of course, if homeowners get a break and business owners do not, most businesses will move out of cities and other urban areas after a while, and that's not good for society in general.

MRSallee 13y ago

> Letting incumbents under-utilize valuable real estate is a bad policy. If the value of the property increases, there is incentive for owners to sell. If a developer wants to "utilize valuable real estate," is it not better that they make an offer and that people have choice in what happens to their property, rather forcing out "incumbents" with no choice due to escalating tax costs? Buying a house with potentially wild inflation of tax costs is about as attractive as buying a house with a variable APR.

muzz 13y ago
> If the value of the property increases, there is incentive for owners to sell. Prop 13 counter-acts the incentive given by market appreciation of the value. The value may go up according to the market, but the owner's taxes are capped. This is an incentive to stay, as an owner would face higher taxes and thus higher costs if they simply moved to an identically-priced home.
- vonmoltke 13y ago
  Florida recently solved that problem by making homestead caps transferrable after a certain period of time.
  - thrownaway2424 13y ago
    This has been possible for decades in California under a later proposition. People over age 55 (iirc) can transfer their assessment to a property of same or less value within or between participating counties. Not all counties participate but several populous counties do (including Alameda).
    - muzz 13y ago
      Only 9 counties participate in inter-county transfers http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1 http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1 And as you point out, if you are under 55 then none of this applies.
- jasonlotito 13y ago
  > The value may go up according to the market, but the owner's taxes are capped. So, the value according the market is not accurate. The value is actually higher. The problem isn't the laws. The problem is the market simply doesn't want to pay an appropriate amount for the person's property.
  - dragonwriter 13y ago
    > So, the value according the market is not accurate. I'm not sure how a market value can be inaccurate, that implies that there is some objectively correct non-market value that you could meeasure the market value against, which is an odd idea. What Prop 13's limit on assessment increases does is (in terms of the forces that drive market prices) is decrease supply (because it increases the value of homes to people who already own them, by decreasing the cost -- in property taxes -- paid compared to the utility derived from holding the property), which, considered on its own, increases market clearing price. It may also increase demand (since it also decreases long-term expected costs for new buyers), but probably more weakly than it increases supply (since the decreased cost is already being realized by sellers -- and more strongly the longer they have held the whome -- wherease it will take several years for the decreased cost to be realized by a new buyer, since purchase events trigger assessment at full value.) > The problem isn't the laws. The problem is the market simply doesn't want to pay an appropriate amount for the person's property. The law adds non-transferrable value (or, less simply, provides a non-transferrable abatement of cost) as long as the owner holds the property. This creates an externally-imposed difference in the value to the owner and the value to other market participants.
bradleyjg 13y ago
> Buying a house with potentially wild inflation of tax costs is about as attractive as buying a house with a variable APR. The one and only reason the US has 30 year fixed rate mortgages, with no prepayment penalty, available levered 5-10x, all at less than 100 bps over the risk free rate is because of massive government implicit and explicit subsidies. Absent distortions it doesn't make sense for most people to buy a house -- it's inherently non-diversified, low liquidity, high transaction costs. But American society has for some bizarre reason decided that home ownership is the sine qua non of human civilization and so every level of government intervenes to distort the market in favor of homeownership. Instead of recognizing this extraordinary intervention, and perhaps being grateful, homeowners tend to either: 1) refuse to recognize that such massive subsidies exist, or 2) see as entirely natural -- and bitch and moan if even the slightest modification is proposed. It's yet another example of the American phenomenon of socialism for me but not for thee (and none dare call it welfare).
- encoderer 13y ago
  On the contrary, Fed and Census data indicates that the net worth of the average homeowner is 30x greater than renters. Part of this is certainly some selection bias. More wealthy people buy homes. But it's more than that. The truth is, buying a home is the only form of investing on margin for most. Also, it's compulsory investment and savings -- both with the principal payment and in the form of property improvements. Finally, of course, are the myriad tax benefits. While it's true that we incentivize home ownership, possibly too much, I think it's unfair that you paint it as an otherwise neutral activity that we strangely endorse with public policy. Land has real value, you can live on (and off) it. It was long seen as the one enduring source of wealth (See John Adams, George Washington, etc). It's much deeper than our postwar tax policies.
  - deleted 13y ago
    [deleted]
  - ahomescu1 13y ago
    > The truth is, buying a home is the only form of investing on margin for most. Also, it's compulsory investment and savings -- both with the principal payment and in the form of property improvements. I find it weird that people look at houses as "investments". For an asset to be an investment for me, it has to be productive. Buying stock in a company or starting your own is productive; buying farm land is productive (you can use it to produce food). A house in itself doesn't produce anything, it's just an asset. If you're relying on buying it cheap and selling it at a high price, that's speculation, not investment (that house still hasn't produced anything, it just happens to be more valued by other people).

rsync 13y ago

You realize prop 13 is a statewide policy, not just a north beach community standard, right ? So while you're thinking of (and playing violins for) a certain sect that you know well here in the cosmopolitan city, there are also hundreds of thousands of "99 percenter" property owners throughout California that really do hurt as they scrape to make ends meet with the major (and usually only) asset they will ever own.

_delirium 13y ago
One half-fix sometimes proposed to solve the most egregious Prop 13 issues but leave it in place for the people you're talking about is to limit it to only owner-occupied primary residences. As it stands today, Prop 13 applies to not only homes people actually live in, but also investment property, vacation homes, even commercial real-estate. Imo any "protect the nature of our community" / "keep old people from being displaced" type justification makes a lot less sense when we're talking about Intel's property taxes, or about property held by real-estate investment trusts.
- zenbowman 13y ago
  I think this is far more reasonable.
r00fus 13y ago
Solution: Split Roll [1]. It would prevent egregious abuses of prop13 like the transfer of ownership coordinated for Ernest & Julio Gallo winery [2], wherein a sweetheart tax valuation on property was transferred to a new owner without triggering a tax re-evaluation, while removing any impact for 99 percenters (and even some of the 1%). [1] http://articles.latimes.com/2009/jul/13/business/fi-hiltzik13 http://articles.latimes.com/2009/jul/13/business/fi-hiltzik1... [2] http://www.car.org/meetings/carmeetings/committee-materials-archive/2013spring/tgf513/ibpsplt513 http://www.car.org/meetings/carmeetings/committee-materials-...

genericuser9999 13y ago

>...Anyway nobody gets thrown out of their house for owing property taxes in California because the local authorities just put liens on the property. Who are you kidding? You get a lien on the house and then that is used to force a sale to cover the amount due. Hell even home owner associations do it all the time if you don't pay your monthly dues for several months.

ScottBurson 13y ago
So the solution, as 'raldi insightfully suggests, is simply not to consider the lien due and payable until the house is sold. I'm not enough of a lawyer to know exactly how that should be structured, but it's a great solution.
- smsm42 13y ago
  This would make underwater mortgage holders (at least lower-income ones) to stop paying taxes completely. After all, they've already lost their money, and have no hope of getting anything out of the sale, and there's no way anybody gets anything more out of them, it's bank's loss now. Moreover, it is in their interest to postpone the sale - since until sold, bank's incentive in eviction is much lower, and incentive in just discharging the part of the mortgage is higher, due to additional buyer costs. So if you shift the tax burden essentially to the buyer of the house, the consequences may be not that good.
  - ScottBurson 13y ago
    The property owner would still be liable for annual tax payments on the assessed value of the property. When that is falling, the Prop. 13 limitation has no effect. The lien we're talking about would be on the difference between the tax paid under Prop. 13 and the tax that would be due if there were no Prop. 13. If the mortgage is underwater, that difference is zero.
dang 13y ago
> Who are you kidding? Please don't address other users this way on Hacker News. Civility is important here. The comment is otherwise substantive and would be a fine one if that bit were simply deleted.

zenbowman 13y ago

This is a pretty inhumane way of looking at property. It's not just about optimization of real estate, when people buy a home, they plan their lives around it. They raise their children in it. There's a huge emotional investment in our home, that is part of being human. Property tax caps are perfectly fine. As a homeowner, I will always vote down ANY increase in property tax. Your mentality values economic optimization over human optimization, and it is one that I reject.

thrownaway2424 13y ago
Sure, everything you say is true, but only for a narrow slice of the real estate market. Did Intel raise their children in their HQ building? No, but their property taxes are protected by Prop 13.
- zenbowman 13y ago
  We invest a lot emotionally in our businesses too, but yes, at most we'd have to make those taxes conditional. But then of course, if homeowners get a break and business owners do not, most businesses will move out of cities and other urban areas after a while, and that's not good for society in general.