patrick.net

wow, ptiemann, you must be a true RE investor if you cannot find fault with this.

That's unbelievable.

ptiemann says

Overall I cannot find a fault with this regulation.

probably because you're not thinking.

ptiemann says

Look, this law does not allow someone to upgrade from a 1-BR studio to a 6-BR mansion. I was told that the properties need to be similar, or the new one has to be SMALLER (the idea is that old people want to down size).

They need to be in the same county.

Overall, the total tax paid stays the same.

If the owner stays in his old house, he pays the low property tax.

If he sells the old house to an unrelated buyer, that unrelated buyer pays market value and the old house now brings in the full property tax.

I think the issue is not the transfer, but proposition 13.

You were told? You can't bother reading the link I provided, so you can think for yourself?

It Appears to me, the exchange is based on the value, at the time of the exchange. It's not an absolute value.

Yes, the houses need to be in the same county OR in another county, that allows an exchange from other other counties, such as. Here is the text from the link I provided:

If it's true that children can pass on their very low property tax rate to their children, then we have the makings of a hereditary aristocracy that sponges off the labor of others.

A few people don't pay tax, and everyone else has to pay their tax for them. Just lovely.

Not only should it not be allowed to pass on your unfairly low tax rate to your kids, it should be a crime to even attempt to do so.

There are some strict requirements about these programs. First, to transfer the property tax from one house to another you have to be over 55, you have to sell your current home and then buy a home of lesser value, you cannot "upgrade". You can also do this tax transfer only once in your lifetime. It was put in place precisely for people like my FIL who moved from a 2400sf house on 1/2 acre to his small condo. He can never make this transfer again.

As far as the property transfer to children, there are also limits to that as well for those that are not primary residences.

Let's think about it this way. Prop 13 was implemented supposedly in order to prevent fixed income individuals from being taxed out of their homes in their twilight years. No problem with the sentiment, but what 13 did was treat a symptom not the problem. It also paved a way for more problems down the road.

13 effectively nullified property tax rate increases to no more than 2% annually of originally accessed value at time of sale. Good one there, stabilization of taxes. Unfortunate consequence #1: It allowed artificial appreciation of houses to easily occur, and actually encouraged that as a good thing, or as building "wealth" by not having a commensurate consequence to the adjustment in "value/price" until someone purchased that property again. Unfortunate consequence #2: As the properties age from date of purchase it allows individuals to take out HELOCs against that "artificial" value increase, rather than just the difference between what is owed on the mortgage and what an otherwise sensible valuation of the property maybe with a taxation method in place that doesn't beg property values to increase. Unfortunate consequence #3 of property tax based on a "percentage of accessed value system": It effectively allows state and local government to manipulate the accessed value and raise or prop-up revenue through planning department decisions, regulatory commisions/agencies, and city/county council/director decisions. All of whom get paid by at least a portion of those property tax revenue they have been able to manipulate (fox guarding the hen house.) Unfortunate consequence #4: It allows those holding the mortgage notes (banks/lenders/funds) to leverage that artificial value as it reduces the outstanding principal to resale value ratio.

What is wrong with homes not appreciating so rapidly? Why do people feel it is acceptable to pay 5,6,7 times the median household income for a median home? The only individuals this benefits are govt., real estate agents/process officials, and lenders/ holders of the note. Why are home "owners" so HAPPY to see their house "value" increase? Do they not understand that they are happy that the value of their dollar vs. the purchase of a different house (or anything) for that matter just diminished and equal or greater amount? Too many sheeple not asking or thinking about the important questions.

If voters don't want to be screwed with any longer, we need to have legislation put forth that restructures property tax in its entirety! % of some supposed accessed valuation is not corruption proof. That needs to change, for the benefit of the tax payer, not the government, banks, real estate industry. Then we might end up with some sembalance of acceptable pricing in homes.

In case you missed my entire point of this post, if property valuations did not increase at rates unsupported by incomes, and/or we had a different method of property taxation, Prop 13 wouldn't be around. And since those are the two problems, there needs to be two solutions.

LarryPatrickMaloney says

Apparently, he was able to transfer his fathers property (his childhood home his father bought in the 1950's) Which was first transferred from his father to himself (prop 13), THEN he did a Prop 60/90/110 exemption.

Yes, this is a one-time exception. It can be done inter-county if the county opts-in.

ptiemann says

Overall I cannot find a fault with this regulation.

The real problem is Prop 13 itself -- one of the worst ideas and one that has made California a worse place to live.

The purpose of this particular objection Larry is citing is to encourage senior citizens to move to a house of equal or lesser value. Theoretically, grandma could move to a smaller condo and keep her tax basis. In reality, however, this hasn't greased the market for sales very much. However, if we're going to have Prop 13 at all (which is highly misguided in the first place), this is a reasonable amendment to it.