“I have voted for every...improvement...now I can’t afford to live here anymore"

Page 5 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.

Cozarkian

Golden Member
Feb 2, 2012
1,352
95
91
Let's say you live in a neighborhood of cloned homes. The market is 100,000 when you all buy, the value increases based on the cap to say 150,000 after some number of years but the real market value is at 750,000. When you sell your home the new owner pays taxes based on 750,000 even if all his neighbors are paying based on 150,000. He is paying 5 times as much property taxes as all of them.

That's why prop 13 is fucking retarded.

Let's assume we fully finance that house with a 30 year fixed mortgage of 6% and live it in for 50 years before retiring. With a 1% property tax rate, we have.

Starting cost: $1,000 tax + ~600 mortgage = $1,600
Cost at retirement: $7,500 tax + fully paid mortgage.

Without prop 13 or an alternative solution, a person might lose their home to a tax lien when they retire because of skyrocketing property tax rates.

Even worse, if a market rapidly appreciates over 2-3 years, a person might be unable to meet their mortgage payments because their tax owed increased faster than their income.


edit: and before some accuses me of wanting government budget to grow 5 times I think it's asinine for tax rate not to be set every year to be equal to budget divided by total assessed value of the county like it's done in NJ. A home growing in value should not increase taxes, only a town's budget increasing/decreasing in size due to people voting for such should effect your property tax increase/decrease.

At first glance that seems like a decent system, but in California you'd have to put limits on annual budget increases or property taxes would skyrocket depending on how well the governor mitigates the state legislature.
 

Argo

Lifer
Apr 8, 2000
10,045
0
0
Starting cost: $1,000 tax + ~600 mortgage = $1,600
Cost at retirement: $7,500 tax + fully paid mortgage.

Without prop 13 or an alternative solution, a person might lose their home to a tax lien when they retire because of skyrocketing property tax rates.

Even worse, if a market rapidly appreciates over 2-3 years, a person might be unable to meet their mortgage payments because their tax owed increased faster than their income.

Assuming 750% increase of property tax is due to 750% increase in house value, their $200k house is now worth $1.5 million.

If they want to live in this house until death, they can just take a $7000 a year loan, in exchange for percentage of proceeds from the sale after they die. Heck, if I'm one of their descendants I happily front them $7k a year knowing that I end up with $1.5 million house at some point.

P.S. Also, your math seems off. The tax is yearly, the mortgage is monthly. So in your example it'd be:

$1000 / 12 tax + $600 mortgage = $683 monthly payment
$7500 / 12 tax + paid off mortgage = $625 monthly payment
 
Last edited:

CLite

Golden Member
Dec 6, 2005
1,726
7
76
At first glance that seems like a decent system, but in California you'd have to put limits on annual budget increases or property taxes would skyrocket depending on how well the governor mitigates the state legislature.

Yep - capping the total budget increase is the right way to do it imo. Up's and down's of real estate market should not determine local budgets.

The California system as currently implemented simply puts a large burden on new home owners without necessarily promoting fiscal responsibility.
 

Cozarkian

Golden Member
Feb 2, 2012
1,352
95
91
$1000 / 12 tax + $600 mortgage = $683 monthly payment
$7500 / 12 tax + paid off mortgage = $625 monthly payment

Yep, guess I had a brain dead moment. That does pretty much negate the retirement argument.

Still a concern if the market rapidly appreciates (doubles in value) though and your monthly payment goes up $80 per month after 2-3 years.

Also still a concern for people that refinance frequently or take out equity loans and never pay off the house.
 

spidey07

No Lifer
Aug 4, 2000
65,469
5
76
No need to argue about property tax. She got the government and policies she voted for.

She went full libtard. The concern is she'll go somewhere else and do the same thing. Liberals are like locusts consuming all they touch.

Liberals will never understand the impact of thei stupidity even when it hits their own best interests. It's a disease of the mind.
 

Argo

Lifer
Apr 8, 2000
10,045
0
0
Yep, guess I had a brain dead moment. That does pretty much negate the retirement argument.

Still a concern if the market rapidly appreciates (doubles in value) though and your monthly payment goes up $80 per month after 2-3 years.

Also still a concern for people that refinance frequently or take out equity loans and never pay off the house.

Yeah, if your house value doubled in a span of 2 years, it could leave some people out dry. But I don't really find that to be a very realistic scenario. And even if that did happen, having to move because you just made a shitload of money isn't the worst problem in the world.
 

halik

Lifer
Oct 10, 2000
25,696
1
0
Err you can take out equity from your house (heloc, reverse mortgage etc) to pay for whatever increase of taxes you might face. It's a good problem to have.
 

DucatiMonster696

Diamond Member
Aug 13, 2009
4,269
1
71
Err you can take out equity from your house (heloc, reverse mortgage etc) to pay for whatever increase of taxes you might face. It's a good problem to have.

That's some sound financial advice. Use your home as a credit card to pay for government excesses in spending. What could go wrong??
 

DucatiMonster696

Diamond Member
Aug 13, 2009
4,269
1
71
The downside of prop 13, course is that people can just buy property and sit on it, since appreciation rate of real estate is way above interest rates today. This in turn adds to the shortage, and keeps driving prices up...

I have zero problem with real estate taxes, of all the taxes today they are the closest in return on investment - you get better schools, services,roads, etc. unlike fed taxes, I feel like my money goes to a decent use...

There are no shortages of homes in CA. You could make a case for San Francisco due to geography but even in SF issues such as the difficulty and pain in the ass hurdles toward gaining SF building permits, rent control on imposed on certain units and other needless regulations such as high limits imposed on new construction of apartment units, etc have a far greater impact on the availability of property both home and rental units in this city.
 
Last edited:

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
Property taxes are the problem not her. Property tax = gentrification and division. Never own what you own. Forced to always produce income until death or lose it. A highly regressive tax. Does not suprize me Texas rolls this way with zero income tax and near zero taxes for exploitation of state natural resources. Can't redline anymore.
 

DucatiMonster696

Diamond Member
Aug 13, 2009
4,269
1
71
Property taxes are the problem not her. Property tax = gentrification and division. Never own what you own. Forced to always produce income until death or lose it. A highly regressive tax. Does not suprize me Texas rolls this way with zero income tax and near zero taxes for exploitation of state natural resources. Can't redline anymore.

Property taxe rates are affected by people like her "VOTING FOR EVERY IMPROVEMENT" without thinking and then ignorantly believing that she would not be affected by her idiocy when the piper (government) demands his due to provide for all those "improvements".

Of which "SURPRISE !!" these things she voted for have a price tag attached to them. A price tag that someone has to pay, ideally those people who demand these "improvements" which is how the system is supposed to work in order to impose accountability and also repercussions onto clueless people like this woman who apparently is are danger herself and to all other rational and informed voters and taxpayers.


As for Texas, one could easily point to New Jersey, Illinois, New York, Connecticut etc if you want to really discuss regressive property taxes. Then again Texas is one of the states in the US with the least tax burden that is placed on its residents.
 
Last edited:

Vic

Elite Member
Jun 12, 2001
50,415
14,303
136
That's some sound financial advice. Use your home as a credit card to pay for government excesses in spending. What could go wrong??

Her property tax increases are the result of gentrification, not excesses in government spending. The Bouldin Creek neighborhood in Austin is one of the hippest areas in one of the hottest housing markets in the country. Her house is now worth many times more than what she paid for it in 1991.
If you think she's gotten a poor return on her investment, then we've found the tard.
 
Last edited:

Zorba

Lifer
Oct 22, 1999
14,452
9,836
136
Or an obvious economic fact.

It's pretty funny that you falsely dismissed it in order to justify your position though. The lack of self awareness here sometimes...

Basically you seem to be pro taxing people's net worth, at least with property taxes, and claim it is okay because the returns are much higher than the tax. You have even called it a "windfall." But what happens to the person that buys their house before a boom, "values" and taxes go way up during the boom, but the person doesn't sell and then there is a bust, after which they sell. They received no benefit for their house being highly valued during the boom, why should they have to pay taxes on it like they were?

It would be just as stupid to charge capital gains tax on stock every year. Not doing so, though, encourages people to hold onto their investments, which I guess you would define as "turtling," which hurts overall market liquidity.

How many poor families living in urban areas have had to sell in the last decade as urban has become hip? Are you in favor of gentrification that makes poor people move from where they have lived for years, just so some yuppies can move in? I am for improving areas naturally, but am very against basically forced displacement of the undesirables.
 

fskimospy

Elite Member
Mar 10, 2006
83,717
47,399
136
I'm not for property taxes on homes generally, but of we are going to have them then I think for a given value of property everyone should be treated the same.

It's funny that you mention people being forced out of their homes but generally the people who benefit most from prop 13 are those who need help the least. It's simply a special tax break carved out for the people who have seen the greatest personal increases in wealth from rising home prices. That's dumb.
 

Vic

Elite Member
Jun 12, 2001
50,415
14,303
136
As the alternatives are urban slums and suburban sprawl (ie Detroit), I'm absolutely in favor of gentrification.
 
Last edited:

Zorba

Lifer
Oct 22, 1999
14,452
9,836
136
As the alternatives are urban slums and suburban sprawl (ie Detroit), I'm absolutely in favor of gentrification.

Doesn't surprise me that you are, surprises me Eskimospy is. In general I am okay with it, I just don't think the tax code is the way to accomplish it.
 

Zorba

Lifer
Oct 22, 1999
14,452
9,836
136
I'm not for property taxes on homes generally, but of we are going to have them then I think for a given value of property everyone should be treated the same.

It's funny that you mention people being forced out of their homes but generally the people who benefit most from prop 13 are those who need help the least. It's simply a special tax break carved out for the people who have seen the greatest personal increases in wealth from rising home prices. That's dumb.

But what good does that value do you, until you sell it? I am completely in favor of capital gains tax on the windfall, but taxing your on paper net worth seems ridiculous.
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
Property taxe rates are affected by people like her "VOTING FOR EVERY IMPROVEMENT" without thinking and then ignorantly believing that she would not be affected by her idiocy when the piper (government) demands his due to provide for all those "improvements".

Of which "SURPRISE !!" these things she voted for have a price tag attached to them. A price tag that someone has to pay, ideally those people who demand these "improvements" which is how the system is supposed to work in order to impose accountability and also repercussions onto clueless people like this woman who apparently is are danger herself and to all other rational and informed voters and taxpayers.


As for Texas, one could easily point to New Jersey, Illinois, New York, Connecticut etc if you want to really discuss regressive property taxes. Then again Texas is one of the states in the US with the least tax burden that is placed on its residents.


We have democratic republic. Some tax burdens and benefits are carried down to the local level with property to some all the way federal govt taxing and providing them. Texas' problem is they shift too much (basically all state services people are used to having) to the local level by not taxing income among other things. This creates problems we see in TX. From fantastic schools to pathetic ones in poor areas. People like this woman maybe getting out taxed from her home. Dunno about " A price tag that someone has to pay, ideally those people who demand these "improvements" which is how the system is supposed to work" poor ppls would have no say under such system since they have no money. Naw we share burden and distribute it among the Republican forms of govt. Problem with TX is its too localized.

By design of course. new segregation.
 
Last edited:

fskimospy

Elite Member
Mar 10, 2006
83,717
47,399
136
But what good does that value do you, until you sell it? I am completely in favor of capital gains tax on the windfall, but taxing your on paper net worth seems ridiculous.

Lots! As others mentioned you could take out a reverse mortgage, pay any extra taxes you might owe and have tons of cash left over. That allows you to capitalize on the increase in value while still living in it.
 

chucky2

Lifer
Dec 9, 1999
10,038
36
86
Lots! As others mentioned you could take out a reverse mortgage, pay any extra taxes you might owe and have tons of cash left over. That allows you to capitalize on the increase in value while still living in it.

Why would someone take out a reverse mortgage on a house they spent 30 years paying off - so they could own it - to only lose their property when they die? The property they spent 30 years paying off and want to leave to their kids, or allow their kids to sell, is now the property of the reverse mortgage company for the sole reason of 'turtling'?

That is probably one of the most greedy things I've seen posted here in P&N, and that's saying a lot...
 

fskimospy

Elite Member
Mar 10, 2006
83,717
47,399
136
Why would someone take out a reverse mortgage on a house they spent 30 years paying off - so they could own it - to only lose their property when they die? The property they spent 30 years paying off and want to leave to their kids, or allow their kids to sell, is now the property of the reverse mortgage company for the sole reason of 'turtling'?

That is probably one of the most greedy things I've seen posted here in P&N, and that's saying a lot...

I don't think you understand reverse mortgages.