Not sure how it works in every state, but my property taxes are liable to increase year to year, for a home I own. Are you saying this is not the case in California? They just true up property taxes for a property upon next sale?
CA assessed value for property tax calculations is capped at 2% growth per year. So if you bought a house in the 1970s you’re never selling that thing as the tax hit on any new property annually would be much more. If anything, you keep the property, rent it out, and never do any major renovation that would trigger a full reassessment.
Oregon passed a ballot measure in the early 90's that is essentially the same.
A mile away I have a literal mansion that is on the market for $8m. looking up the property taxes, the house has been owned by a trust since the late 80's, and they pay less in property taxes on the mansion and 15 acres than I do for my regular house in the suburbs..
I'm don't know them, but have heard its the kids that live in the house now, but the trust didn't sell or change so taxes have been kept the same.
Also have a house down the street that has been completely vacant for 2 years now, in the middle of a housing crisis in my area. The owner passed away, and the family couldn't decide what to do with her stuff. I talked to one of them, he said the taxes are only $500/year on the place, and utilities are less than $100/month, and pretty cheap to have a crew mow the lawn weekly, till they decide what to do.
It's not just the West Coast, midwest suburb here and our home's previous owners only had it for a decade but we had a 60% property tax increase after buying.
https://en.wikipedia.org/wiki/1978_California_Proposition_13
- "by assessing values at their 1976 value and restricted annual increases of assessed value to an inflation factor, not to exceed 2% per year. It prohibits reassessment of a new base year value except in cases of (a) change in ownership, or (b) completion of new construction."
Businesses in CA got people to vote for prop13 in the 70s I think (the propaganda justifying it was essentially “the Supreme Court said your property taxes have to pay for the same quality of education for poor people”, but the actual reason is a massive tax cut for corporations as they never actually sell property so get a permanent cut to property taxes).
It basically says “unless a property changes ownership the taxable valuation cannot increase by more than 2%”, it doesn’t matter if it’s a rental property that has rent increased by 50%, or a corporate owned property that has financial reports reflecting its true value, it’s capped at 2% increase.
This has a follow on impact of increasing the actual property tax rates (because the majority of properties are undervalued by actual market rates the only option is higher base tax rates) which means if you do buy a new property you get hit with massive property taxes (over time they will become cheap relative to property value but initial cost is insane).
We’ve owned our house for a decade, and if we were to try and buy it today the property taxes on it would be higher than our current mortgage payments because of the increase in actual market value.
The actual fix for this is complicated (there’s a real issue where a person is retired say and their property taxes could increase to being unaffordable forcing them to sell their home), but I feel a reasonable improvement would be to say that taxable value for residential rental property increases at the maximum of “2% or rate of rent increase”, and commercial property gets taxed at the value included in financial reports, or something to that effect. Alas prop13 is actually a modification to the California state constitution so the only way to fix it is through an amendment to the constitution.
It's interesting that in your example, your specific situation would still have tax rates subsidized by your neighbors while the people you consider the out-group (corporations, landlords) get minimal or no benefit from it. I'm also not convinced corporations are getting any outsized benefit, business buy and sell real estate all the time.
The fix doesn't seem complicated. Assess a home's value. Tax it. If you're concerned about it disproportionately impacting low or fixed income folks, move as much of that tax as you can to income and commuter taxes.
The people paying the property taxes are the tenants. Except they’re paying market rate for the property while the owner pays far below that actual rate. In other words the artificially lowered tax rate is just a profit center for the owner.
Second, the owner does benefit from those property taxes: the property taxes fund a bunch of the infrastructure that makes their property have value, that makes tenants interested, covers police and fire, etc
Except because the land owners in these cases aren’t paying their fair share, so in addition to profiting off tenants that are paying market rate for the property owners are being subsidized by the increased base rate others have to pay.
People do not have direct control over the market value of their property so it is trivial to have a world where people’s property taxes could increase beyond what they could afford at all, while simultaneously pricing them out moving (to “realize” the “value” of their home), but if you’re renting a property out at the market rate then you should be paying taxes at the market rate.
You seem to think I'm arguing for some sort of landlord handout when in actuality I'm arguing that people pay fair market rate for everything, including their property taxes, at all times.
If your property taxes are too expensive for you, you should move.
You could delay the tax collection above a certain amount until sale of the property. But I'm against allowing people to sit on valuable property while contributing little back to society. Get a reverse mortgage or move out.
Delaying the collection has weird side effects and edge cases where if you hold on to the property long enough you could get into a position where you will actually lose money selling it, or worse yet even have to write a check to the government when you sell your house.
I would agree in general that if you can't afford the market-rate property taxes on your home, you should move. And stuff like Prop 13 just makes your neighbors subsidize you.
I see this argued a lot but never with any reason why other than hand-wavey arguments about "fairness." Why are high property taxes pricing someone out of area inherently worse than property values or insurance costs forcing someone out?
If you can't afford to live there, shouldn't you have to live somewhere else? Even if you think housing is a human right, housing in the specific city/neighborhood/suburb/street of your choice is not.
Yes. Proposition 13 is famous for triggering sweeping tax changes across the country.
In CA, Prop 13 effectively caps how much the assessed value of your home can increase each year to 2%.
So over time, the tax burden of long term property is much less than the current property value.
When the house changes hands (generally) the house is reassessed to the market.
There was also new laws passed a few years ago where a family can bring their current tax basis forward to a new home.
There’s also the phenomenon of businesses buying other businesses, but leaving them formally intact so that their assets don’t “change hands” thus maintaining the inherited tax basis.
Not only your property tax rate but your valuation in other states.
Used rebuild friends old homes and do habitat in a freedom state like TX. They can't afford to live there anymore. Low-service state gov't rolls it all down to you.