On Monday, August 11, 2014 1:40:17 PM UTC-4, Scott Lurndal wrote:
trader_4 writes:

On Monday, August 11, 2014 11:23:35 AM UTC-4, Scott Lurndal wrote:



Taxes, by law, are capped at 1% of the price you paid (see prop 13).



It actually says that it's capped at 1% of the *assessed value*, which

can be totally different, especially for a house bought 20+ years ago.



Assessed value at the time of purchase, which is the amount of purchase.



That's pretty screwed up then and unfair. Somebody that bought a house
20 years ago that's now worth 1 mil, is still paying taxes based on a purchase
price that has nothing to do with reality. The other guy comes along
and buys a new 1mil house and he pays 1/3, 1/2 the taxes? How is that fair?
No wonder CA is on the path to bankruptcy.

I can only imagine the distortions it causes in the real estate market,
eg people that would like to move, won't move because they don't want
their taxes to double for a similar house with the same present value.





So, now I'm confused. Danny who lives there said:



I've lived in san jose for 22 years as a property owner.





"Taxes are roughly between 1.5% and 2% of the price you paid for the

house, so, the MEDIAN property taxes in Saratoga would be 2% of

$1,340,000, which is about $27,000/year, which sounds about right

for where I live also. "



He's wrong. He also doesn't understand what progressive taxation means.



He might be wrong on the tax rate, but I think he understands exactly
what progressive taxation means.




If you bought a million dollar house today, your property tax

assessment will be 10,000/yr, plus/minus $500. Plus about $500/yr

of fixed assessments (flood control, sewer, et alia). Can't go

up by more than $200/year by law for that house until an ownership

change[*].

And the guy next door, who bought his house 10 or 20 years ago is
benefitting from an artifical low rate that's half what the new guy
is paying. Some system.





I walk my check to the county tax assessors office twice a year,

I know exactly how much I pay and what my house is worth.



I bought in san jose in 1992, and my house is worth 3x what I paid

for it back then, yet my property taxes are about 0.6% of the current

assessed value (they were 1.0% of the assessed value when I purchased).



And you think that right and fair?



And that's _after_ yearly bumps (or sometimes decreases) in the

amount of taxes paid based on the prop 13 formula.



If they pegged the property tax on current value, I'd be paying perhaps 2 grand more

a year than I am.

I would think it would be a hell of a lot bigger difference than that.
Since 1992 hasn't CA housing gone through the roof? How could it be
based on a 1992 price, with only 2% or less increase each year, and
you're only paying $2K less? That doesn't compute.



That's why prop 13 was passed in the first place,

given the large increases in value year-over-year in a space constrained

location like the bay area.



It sounds like they had the right idea. But in turn, now the state is
broke and you have someone living in a house that costs X paying a hell
of a lot more than someone else who lives in a house worth exactly the
same amount, just because one guy bought it 20 years ago.




[*] business community fux with this by doing funky transfers that

don't trigger the reassessment - I hope they fix that loophole.

It sounds to me like the whole system is screwed. And if anything needs
to be fixed, it's that you should be paying what everyone else pays with
a house worth the same amount.