Landlords and Heirs: Why Prop 13 isn’t just unfair, it’s un-American | Hacker News Reader

Landlords and Heirs: Why Prop 13 isn’t just unfair, it’s un-American

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12 pointsphilsnow6 comments

I don't completely understand his argument that raising prop tax on landlords wouldn't increase rent prices --

> It’s important to note that the tenants aren’t seeing any of those tax savings. They pay $8,000/month, full market rate. Landlords charge whatever rent the market bears — older investors receiving large Prop 13 subsidies simply enjoy a higher profit margin than younger ones who do don’t.

Doesn't that still affect the market, though? Wouldn't some landlords' lower overhead still drive the price down a little?

Considering SF/SV market rates for rent do not cover the mortgage and property taxes of a newly acquired property, there's likely some level of price decreasing competition that the lower overhead units are providing.

(Though to be fair, a zero-mortage, full property tax bearing unit would also have lower overhead than a mortgage burdened one)

The landlords' costs shouldn't affect rent prices, except when it decreases the supply of rental units. The property tax increase primarily affects buildings that were constructed decades ago, has a very small effect on buildings that were constructed recently and has absolutely no effect on newly constructed buildings. The landlords can't go back in time and decide not to build the building and removing the existing building from the market does not let them escape the property taxes, so there shouldn't be any effect on supply.

Repealing prop 13 might actually increase the supply of rentals, as it incentivizes renting out currently underutilized real estate.

I looked up the house I grew up in which my dad still owns. He paid $2400 in property tax last year. The people that bought my best friends house paid $14,000.

Calculate property tax on revenue and you solve both problems.

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