Comment by hellbannedguy | Hacker News Reader

Comment by hellbannedguy | Hacker News Reader

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You mean old middle class, and poor homeowners, can stay in the house they raised a family in?

The only reason my high school educated 80 years old mother in declining health can stay in a home, and county, she feels somewhat safe is because of prop 13.

Her biannual property taxes are still a big deal when they arrive.

I've said this before, but I'm beginning to think if you didn't live through the craziness before Prop 13, you won't ever quite get it.

Prop 13 has been the only blessing most homeowners have been given.

If you want to put income limits on the gift of prop 13 fine, but doing away with it completely would be evil. By income limits I mean the guy making $600,000/year, and a huge bank account, could probally still survive without prop 13 protection.

The 80 year old lady, or man, surviving on 1/2 widower's blue collar pension is another story.

(I'm for means testing on all programs. I'm also for tieing all societal fees/fines---speeding tickets, registration, patent fees, etc. to 1040 income/assets wealth.)

What seems odd to me (if I understand it correctly) is that prop 13 keeps your property tax low, but you still get the full benefit of the appreciation in price when you sell the property. It kind of seems like if it's artificially keeping the tax low, the full tax bill should come due at some point, which would logically be at the change of ownership.

Property tax is the recurring value tax, kind of a wealth tax while you hold a property, and prop 13 does shield much of the appreciated value from this. A new homeowner might be paying 1-2% of market price per year, while an elderly neighbor might pay 1-2% of an assessed value that is closer to a market value from 20+ years ago. The assessment does increase at a very slow rate, and in larger jumps with remodeling or other improvements.

At the sale, the appreciation becomes realized as capital gains income. There are some rules making a portion of gains tax-exempt for a typical homeowner, but the remainder of a large appreciation is taxed as income. There can also be a sales/transfer tax on the transaction, which is of a comparable rate to the annual property tax rate.

The third significant event is inheritance, where the house could pass to an heir without a sale and have its basis updated to current value. This is when the appreciated gains can really go untaxed.

You can have carveouts for your 80 year old grandmother without freezing property taxes for everyone.

Prop 13 disincentivizes building housing.

Stop calling people evil just because your grandmother isn't the center of their policy concerns.

> Prop 13 disincentivizes building housing.

I didn't think we reached the point where people are arguing that things that make housing more valuable disincentivize building more homes - but here we are.

It is zoning restrictions, EIR, etc., that disincentivize housing.

Prop 13 absolutely disincentivizes building housing. Other policies can also be bad. But grandma's house isn't being bulldozed to make way for a quadplex because she's insulated from the market.

https://www.kqed.org/news/11700683/too-few-homes-is-proposit...

But if you own a home in California, you are incentivized to maintain prop 13.

It's funny how hard it is for people to understand something when it cuts against their personal interests.

Your mother could easily pay higher property taxes with a home equity line of credit. She probably should also be using that HELOC to fund a more comfortable lifestyle -- she probably needs that money more than her heirs do. (I'm assuming, given that you're posting on HN).

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