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1   SunnyvaleCA   2018 Aug 17, 2:09pm  

The way the current laws work, not only do the kids inherit a house "for free," but they also inherit the super-low property tax on the house — the property tax is based on the price of the house when the parents bought the property (quite possibly before the child was even born).

Many of the people getting this perk are not exactly what you would call "elite." They had working-class parents that bought a house 30 or 40 years ago and kept it until death. That said, the benefit to their children could be several million dollars. Buying a very basic house in my 94087 neighborhood would cost you $2MM plus $22k/year taxes. Sure would be nice to get that for free.

I'm surprised Prop 13 and other tax issues haven't been re-visited with the top-to-bottom democrat state government. A simple change I would suggest (for which I wouldn't shed a single tear) would be to say you can only get the Prop 13 benefit for your primary residence. This has a bunch of implications: (1) businesses can't get Prop 13 benefits, (2) your rental property or second beach home can't get Prop 13 benefits, and (3) you have the claim (and pay income tax) as an in-state resident (since it is your "primary residence").
2   Patrick   2018 Aug 17, 5:39pm  

SunnyvaleCA says
A simple change I would suggest (for which I wouldn't shed a single tear) would be to say you can only get the Prop 13 benefit for your primary residence. This has a bunch of implications: (1) businesses can't get Prop 13 benefits, (2) your rental property or second beach home can't get Prop 13 benefits, and (3) you have the claim (and pay income tax) as an in-state resident (since it is your "primary residence").



Amen.
3   alpo   2018 Aug 17, 10:15pm  

SunnyvaleCA says
The way the current laws work, not only do the kids inherit a house "for free," but they also inherit the super-low property tax on the house — the property tax is based on the price of the house when the parents bought the property (quite possibly before the child was even born).

The tax basis of any inherited property, but not just house, gets stepped up to the current market value if the original owner dies. Prop 13 has nothing to do with this.

SunnyvaleCA says
I'm surprised Prop 13 and other tax issues haven't been re-visited with the top-to-bottom democrat state government.

Not sure why you are getting so jealous of homeowners. There are states that don't have any income tax. California has high income tax and sales tax both. On top of that you want to increase the property tax as well and give the money to badly run and wasteful government - that money will only go into paying pensions and ensuring retirement of city workers rather than home-owners. In either case, property tax revenue has been sky rocketing as people usually don't sit on houses for generations, but tend to sell after 5 to 7 years of ownership or at the time of retirement.
4   epitaph   2018 Aug 17, 11:35pm  

Prop 13 was a great idea in theory. Hhaha just kidding.
5   Sunnyvale94087   2018 Aug 18, 1:02am  

alpo says
The tax basis of any inherited property, but not just house, gets stepped up to the current market value if the original owner dies. Prop 13 has nothing to do with this.


You are correct that Prop 13 has nothing to do with stopping an inherited property from being re-assessed. However, a law that went through in 1986 called the "parent-child reassessment exclusion" comes into play for inheriting a parents' primary residence. Here's a link... http://articles.latimes.com/2005/sep/25/realestate/re-inheritside25
6   Sunnyvale94087   2018 Aug 18, 1:18am  

alpo says
Not sure why you are getting so jealous of homeowners. There are states that don't have any income tax. California has high income tax and sales tax both.


My issue with Prop 13 is that its effects are wildly uneven and it creates distortions in the market. If, for example, property tax were 0.5% of actual market value, I'd pay about what I'm paying now, but I wouldn't be penalized (tax wise) if I chose to sell this house and buy a different one (to downsize, for example).

My area of Sunnyvale is exceedingly expensive (being walking distance to the spaceship). Prop 13 creates disincentive for retired people to move away to places that might be just as nice (or nicer) but just not so close to the high-paying tech jobs. Prop 13 is yet another barrier to the free market of hoses (the other huge barriers are costs of the real estate cartel and the effort required in moving). Thanks in part to these barriers, we have tech workers living farther away and commuting long distances daily while retired people who live close complain about the ever increasing crowdedness.
7   Blue   2018 Aug 18, 2:23am  

alpo says
SunnyvaleCA says
The way the current laws work, not only do the kids inherit a house "for free," but they also inherit the super-low property tax on the house — the property tax is based on the price of the house when the parents bought the property (quite possibly before the child was even born).

The tax basis of any inherited property, but not just house, gets stepped up to the current market value if the original owner dies. Prop 13 has nothing to do with this.

SunnyvaleCA says
I'm surprised Prop 13 and other tax issues haven't been re-visited with the top-to-bottom democrat state government.

Not sure why you are getting so jealous of homeowners. There are states that don't have any income tax. California has high income tax and sales tax both. On top of that you want to increase the property tax as well ...


>Not sure why you are getting so jealous of homeowners.
Are you serious!
Because of Prop 13 families and communities are financially segregated and brought back slavery in full force to serve entitlements to neighbors. Prop 13 is all about wealth transfer and higher end entitlement.
Repeal proposition 13 in every form and apply uniform tax rate like every other state.
8   RWSGFY   2018 Aug 18, 7:34am  

Blue says
Because of Prop 13 families and communities are financially segregated and brought back slavery in full force to serve entitlements to neighbors.


I hear you, brother: all this whipping and droit du seigneur enforcement does wear us, Prop 13 slave owners, down.
9   alpo   2018 Aug 18, 8:07am  

pwagner says
My issue with Prop 13 is that its effects are wildly uneven and it creates distortions in the market.


I am not sure what you mean by this.


pwagner says
If, for example, property tax were 0.5% of actual market value, I'd pay about what I'm paying now, but I wouldn't be penalized (tax wise) if I chose to sell this house and buy a different one (to downsize, for example).


If you sell your current house for a profit and use the money to buy another house then you can do a 1031 exchange without incurring tax penalty. This is not just for house for many other capital and business assets as well. However, if you sell the house and cash in by pocketing the money, then you would need to pay capital gains tax - and this is true for any capital asset not jus house. If you are 50+ year old, then it is also possible to transfer your property tax basis from the old house to the new house.

I would rather get rid of property taxes. Once you buy an asset, you buy it and shouldn't have to pay rent on it. Instead of property taxes there should be direct taxes that everyone living in an area should be paying for ensuring public services. Taxing property once it has been paid for with after tax money is stupid.
10   alpo   2018 Aug 18, 9:09am  

Oh yeah and its about time we got rid of cushy pensions for government employees. Government employees getting life long pension on the backs of tax payers most of whom don't get any pension is a relic of the past and needs to be gotten rid of.
11   FortWayne   2018 Aug 18, 11:18am  

How about we talk about illegals who pay 0 taxes working for cash?

Welfare abusers who pay no taxes?
12   alpo   2018 Aug 18, 11:32am  

FortWayne says
How about we talk about illegals who pay 0 taxes working for cash?

Welfare abusers who pay no taxes?


At least the illegals do some work for a small amount of cash, compared to many government employees who rake money for useless work and then earn lifelong pension for free and still complain as to how cash strapped governments are (despite the fact that tax revenue has been skyrocketing). The "cash strapped" governments is an euphemism for "we as government employees want to be paid more."
13   Sunnyvale94087   2018 Aug 18, 11:47am  

alpo says
pwagner says
My issue with Prop 13 is that its effects are wildly uneven and it creates distortions in the market.


I am not sure what you mean by this.

The "wildly uneven" part seems pretty straightforward: people pay greatly different amounts for similar properties of similar value.

As far as "distortions," that's pretty easy too. The distortions means that people are (partially) making decisions on tax avoidance and that those decisions are creating other problems that were unintended when the tax changes were made. Let me give you and example from my neighborhood.

Looking at Zillow, a purchaser of my house would be taxed at about $22k. My neighbors directly to the left, right, and across the street from me all have similar or better houses (same age, same style, but more rooms and more square feet) but are each paying barely $1k/year. That's clearly a distortion in tax application. Is it "wasteful" and creating unintended consequences? Maybe. One neighbor rents out his house; perhaps without the tax distortion the neighbor would sell and let it become an "owner occupied" house — something the government seems to think is a good thing (and maybe it does indeed lead to nicer communities). The other two houses are owner occupied by single old women (husbands have both died); they can't take care of their own houses, they have no need for such large houses (i.e.: 3 or 4 bedrooms, 2 bathrooms, and 2 car garage for a single person with one car), and they don't gain any benefit from their location. One neighbor's husband used to work at the HP complex that is now the spaceship so could walk or bicycle to work. That's great, but now her living there is hogging that house and keeping someone else from having a nice, short, commute that would help reduce road traffic and pollution.
14   Sunnyvale94087   2018 Aug 18, 11:59am  

alpo says
If you sell your current house for a profit and use the money to buy another house then you can do a 1031 exchange without incurring tax penalty.

If you sell your BUSINESS property, you can exchange for another BUSINESS property. Few in my area are renting out their houses. Further, if they are renting out their houses, the Prop 13 gives them special advantage for NOT exchanging it for a rental unit elsewhere. Therefore, Prop 13 is either keeping people in their homes (people that no longer work and so no longer enjoy the short commute to work) or keeping landlords from turning over properties to buyers to become owner-occupied. Here you go: https://www.realized1031.com/blog/you-can-do-a-1031-exchange-on-a-primary-residence-heres-how

If I'm wrong about this, then PLEASE let me know and send a link. I'd love to flee and escape the capital gains.,
15   Sunnyvale94087   2018 Aug 18, 12:08pm  

alpo says
If you are 50+ year old, then it is also possible to transfer your property tax basis from the old house to the new house.

I don't think that's quite true. I think it's 55 years old. This is important in my particular case, as I'd only have a few months to wait if it were merely 50+. Here's a link: https://www.sfchronicle.com/business/networth/article/How-older-CA-homeowners-can-get-property-tax-6778070.php

From the article (above): “Proposition 13 has a lock-in effect. That was the justification for Propositions 60 and 90.” Yeah, well, this still doesn't equalize things; it just means they're not as lopsided. A uniform property tax would mean someone moving out of the Bay Area and trading in their $2MM house for a $500K house would see their taxes cut to a quarter.
16   Sunnyvale94087   2018 Aug 18, 12:11pm  

alpo says
I would rather get rid of property taxes. Once you buy an asset, you buy it and shouldn't have to pay rent on it.

Well, we're 100% in agreement here!

If you think about it, someone buying a house now is the same thing as a renter but with a much much much larger "deposit"...
Renter: $2k deposit, $2k/month (rent); you get some or all of your deposit back when you leave.
Bay area home buyer: $2MM deposit, $2k/month (taxes); you get some of your deposit back when you leave (maybe more, maybe less)
17   BayArea   2018 Aug 18, 3:27pm  

Prop 13 is downright criminal
18   lostand confused   2018 Aug 18, 3:42pm  

BayArea says
Prop 13 is downright criminal

Be careful what you wish for. Coem to Illinois and pay 15k for 350k house ayear and then there is no cap on taxes. The pigs here want to increase income taxes also.
19   lostand confused   2018 Aug 18, 3:42pm  

BayArea says
Prop 13 is downright criminal

Be careful what you wish for. Coem to Illinois and pay 15k for 350k house ayear and then there is no cap on taxes. The pigs here want to increase income taxes also.
20   BayArea   2018 Aug 18, 3:48pm  

lostand confused says
BayArea says
Prop 13 is downright criminal

Be careful what you wish for. Coem to Illinois and pay 15k for 350k house ayear and then there is no cap on taxes. The pigs here want to increase income taxes also.


What does that have anything to do with prop13 in CA?
21   RWSGFY   2018 Aug 18, 6:08pm  

BayArea says
lostand confused says
BayArea says
Prop 13 is downright criminal

Be careful what you wish for. Coem to Illinois and pay 15k for 350k house ayear and then there is no cap on taxes. The pigs here want to increase income taxes also.


What does that have anything to do with prop13 in CA?


It has everything to do with what will happen if Prop13 is repealed.
22   alpo   2018 Aug 18, 6:39pm  

pwagner says
The distortions means that people are (partially) making decisions on tax avoidance and that those decisions are creating other problems that were unintended when the tax changes were made


In this country it is perfectly normal to make decisions to minimize and avoid taxes. Companies do it at a massive scale.

pwagner says
The other two houses are owner occupied by single old women (husbands have both died); they can't take care of their own houses, they have no need for such large houses (i.e.: 3 or 4 bedrooms, 2 bathrooms, and 2 car garage for a single person with one car), and they don't gain any benefit from their location.


Your neighbors own that house so its for them to decide whether they have need for such a large house or not or whether they gain benefit from it. Now if someone wants to pay the owner to sell or rent the house then that would work just fine - property taxes or not there is a price for everything.

pwagner says
One neighbor's husband used to work at the HP complex that is now the spaceship so could walk or bicycle to work. That's great, but now her living there is hogging that house and keeping someone else from having a nice, short, commute that would help reduce road traffic and pollution.


We are not a socialist planned economy (that model has been proven to be a failure). We are a capitalist country where private ownership is respected and desired. So its not the neighbors or the government that gets to decide whether the old lady is hogging the house, but the old lady herself since its her house. I find it very surprising that you are blaming the old lady who is the rightful owner of the house for everything from traffic problem to pollution.

We are not a socialist country.

pwagner says
I'd love to flee and escape the capital gains.,


You can't escape capital gains tax. its not just for houses but for other assets too. But yeah, I agree that homeowners should be able to do a 1031 exchange if needed. I agree that the tax scheme in this country needs to be cleaned up and as part of that property taxes should be eliminated. It makes no sense to pay "rent" on something that you have bought with post-tax money.

If you are worried about distortions you should be thinking about how much money we put into Defense or Health Care or how 1% of the people in this country control 99% of the wealth yet somehow we still consider ourselves to be a democrazy. Why penalize home owners who have worked hard to create security around them with a house. If the issues are "distortions", then cut the Defense budget or make health care cheaper or redistribute wealth from top 1% to rest of the 99%.
23   Blue   2018 Aug 18, 8:35pm  

BayArea says
lostand confused says
BayArea says
Prop 13 is downright criminal

Be careful what you wish for. Coem to Illinois and pay 15k for 350k house ayear and then there is no cap on taxes. The pigs here want to increase income taxes also.


What does that have anything to do with prop13 in CA?


Folks, do not get confused on 1. Uniform Tax rate vs 2. Massive uneven tax rate.
Prop 13 is all about (2). massive uneven taxes.
Uniform Rate rate (1) should be high or low is a different topic.
In case of (1), if taxes are higher go for zero or what ever that is, but it should be same for all.
24   FortWayne   2018 Aug 18, 9:04pm  

Repeal prop 13 and you’ll fuck middle class into poverty here in CA where unions will kill us all.

Unions need 6 figure pensions for life retiring at 55. You slaves keep on working hard to pay those taxes. Repeal 13, gives them more money from your pocket. But it’s naive to think they’ll not want more.

Next we have EQUALITY brigade that runs around screaming they are underprivileged and should get more from government than white people. And they run many government programs too out here.

Repealing prop 13 will fucking suicide taxpayers.

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