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  1. #1
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    California Prop 13 should go or Stay?

    So for the people who live in CA you are probably familiar with prop 13 and for those who don't live in CA it is a law that limits how and when property taxes can increase. This law has created some ridiculous situations. As with all laws it can be exploited and in some cases is taken advantage of and benefits ultra wealthy people and corporations but it also benefits long time property owners who happen to own property in places where VERY wealthy neighborhoods grow up around them while they wouldn't normally be able to afford property where they are.

    What is everyones thoughts on this proposition? I have heard that they are currently putting forth efforts in Sacramento to get rid of it. I don't know if they want to replace it with something else or just get rid of it.

    I know for me I live on family property that my grandmother purchased in the '60's and the area back then was very isolated and very cheap. Over time millionaires have moved in and built mansions all around us raising the property prices to the point where very few people would be able to afford to live in the area and buy property unless they were millionaires.

    I am worried because we could literally be taxed out of being able to afford our home should a reassessment happen and the taxes were adjusted based on the current value of the property. I am sure this is not the most common situation but I am sure it isn't an insignificant amount of people in a similar boat across the state.

    I hope that rather than getting rid of prop 13 completely they adjust it or change it to make sense.

    I am not an expert on this subject so I would like to hear other peoples opinions on the matter. Maybe I am worried about nothing?

  2. #2
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    I don't think it's something that will ever be completely gone, but I do suspect loopholes on it will be closed. My dad and his wife exploited a couple just recently. She owed her house in a prime real estate area since her first child was born, and she got it in her divorce with her previous husband. So property taxes on it were dirt cheap. El Doraldo county recently (a few months after they moved up there) finally closed a loophole agreement with Alameda County where if you sold, moved and bought in each others counties immediately, you could carry over your property tax rate. So they were able to buy with straight cash, a 1/4 acre home for about 650k, after selling their house in Fremont for a little over a million, and carry the property tax rate she had on the fremont house from back in the 90's, well before the value skyrocketed. Think their property tax value is about 35% of what it would be if those two counties didn't have that agreement with each other.

  3. #3
    Hackey Thread Lurker since 2010
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    I know that the rumblings of the proposed changes to Prop 13 focuses on businesses. A fair number of business entities large and small are exploiting a loophole that triggers a reassessment when there is a majority owner change of a property. So what happens is a lot of minor stakeholders & shell companies equally divvy up property ownership during a sale evading the reassessment.

    Sauce -
    https://codes.findlaw.com/ca/revenue...c-sect-64.html
    https://journal.firsttuesday.us/chan...oophole/65104/

    If that revision hits the ballots, expect a LOT of commercial airtime for (teachers, social services, healthcare) and against (businesses, anti-tax groups, farmers.)

    For residential properties, that is such a thorny topic because without Prop 13, his home would get reassessed from $325k (2009 value) to nearly $900k and would probably have to move out, even when including his partial tax exemption from the Veterans' Administration.

    It's difficult for me to say which direction I want because I don't own property, nor would I know the 5-10 year effects of erasing/amending Prop 13. I know based on the general political climate, I could predict this would happen with repeal:
    +Schools and social services would have better funding.
    +There would be no change on the rate of new home building. Cities will continue to NIMBY all the way through appeals processes.
    +A lot of old people would move out, probably inland or the Central Valley or out of state, to affordable cities. A gradual demographic shift younger.
    +No net effect on millennial housing ownership:rental ratio unless a housing bubble bursts from olds moving out.
    +As much as other taxes may decrease (car registration, sales, gas), I doubt it would happen unless there was such an absurd surge from the property tax rolls that everyone would revolt at the current tax structures.

  4. #4
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    I guess my biggest contention with this is that in a state facing MASSIVE housing issues anything that could possibly price normal working class people out of their homes because gentrification happened around them is a super shitty thing to do and needs to be prevented.

    I agree with the corporations/businesses aspect of it though.

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    Hell, if I want to live anywhere near where I work, I'm already priced out. At current property tax levels, I'd be looking at anywhere from am extra 1200-2000 a month to set aside for property tax on top of a mortgage that, unless I hit the lottery and can afford the 125-250k to get below PMI and also lower my monthly bill, will run me about 2800-3500 a month.

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  6. #6
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    Prop 13 is like corporate personhood, a legal hack to solve something, that has unfortunate consequences.

    I'm OK with Prop 13 being removed, but not in isolation. If it goes, it must be combined with something to keep/get people in housing where they already are.

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    Quote Originally Posted by Cantih View Post
    Prop 13 is like corporate personhood, a legal hack to solve something, that has unfortunate consequences.

    I'm OK with Prop 13 being removed, but not in isolation. If it goes, it must be combined with something to keep/get people in housing where they already are.
    This is how I feel as well. It isn't that I don't want it gone it is that if provisions are not made for legitimate cases where it helps people keep their housing then it becomes a big problem. Get rid of it but make sure that families living in their homes don't get kicked out or have to sell because their taxes skyrocket.

  8. #8
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    California needs to uncap their property tax shit this is all dumb. People who should retire and gtfo should do so instead of sitting on their houses because it is their retirement savings.

    California has made themselves a problem because they are apparently idiots and there isn't a great transition plan but it is clearly bad, like flood insurance

  9. #9
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    Quote Originally Posted by zoobernut View Post
    I guess my biggest contention with this is that in a state facing MASSIVE housing issues anything that could possibly price normal working class people out of their homes because gentrification happened around them is a super shitty thing to do and needs to be prevented.

    I agree with the corporations/businesses aspect of it though.
    This is my stance as well.

    To be fair, too, California is doing well economically compared to most other states, and while it prevents us from having even MORE, I see as this making things overall worse for the average person than better.


    I guess I'd like to see where they'd want that extra money to go to, and would it be offset by reducing taxes in other areas to the point that it won't make a difference anymore.

  10. #10
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    Quote Originally Posted by Byrthnoth View Post
    California needs to uncap their property tax shit this is all dumb. People who should retire and gtfo should do so instead of sitting on their houses because it is their retirement savings.

    California has made themselves a problem because they are apparently idiots and there isn't a great transition plan but it is clearly bad, like flood insurance
    My grandmother died on her property. I wouldn't wish her to have to move for anything. She would have been miserable anywhere else. I am not of retiring age and I am living on her property that is now a family property. There is a lot more nuance to this than you are making it out to be. Also I don't know how prop 13 treats extra homes but when you have an occupancy rate of homes in an area of 50% or less and the rest are vacation homes or investment properties that are empty that is a bigger issue than the retirees living in their home that they bought and paid off in the '60's or '70's.

  11. #11

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    proposition 13 has been a regressive, distortive disaster and should have been repealed decades ago in toto. our financial situation has the appearance of being quite rosy at the moment (our unfunded pension liabilities are a ticking time bomb, but, another post) which is the only time such reassessment is possible and while excluding commercial property is a nice start it is insufficient in and of itself.

  12. #12
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    Yeah I don't think I am missing nuance.

    Property taxes are what we owe the public for our use of public resources (land). It is dumb to decouple them from the value of those resources to the public.

    If prop 13 is removed, outcomes that would normally have been a result of increasing property values (gentrification) are now:
    1) exacerbated because property values have increased more than they would have without prop 13
    2) going to be seen as coming from the government when they would previously have been seen as coming from private industry

    Prop 13 was a financial and PR disaster for CA and they were idiots for implementing it.

  13. #13
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    The amendment for Prop 13 is on the November ballot for commercial and industrial properties (commercial agriculture exempted).

    https://ballotpedia.org/California_T...tiative_(2020)

    The fiscal impact statement gives a general overview of projected windfall and where it would be directed to.

    Net increase in annual property tax revenues of $6.5 billion to $10.5 billion in most years, depending on the strength of real estate markets. After paying for county administrative costs and backfilling state income tax losses related to the measure, the remaining $6 billion to $10 billion would be allocated to schools (40 percent) and other local governments (60 percent).