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Comment by treeman79 | Hacker News Reader

This is why prop 13 was passed in California.

https://en.m.wikipedia.org/wiki/1978_California_Proposition_...

Caps on property tax, and tax deductions for mortgage interest payments, and not taxing appreciation on a home sale, are very simply, juicy tax breaks for rich people. Not saying everyone who owns a home is rich, but, as a group, they are far wealthier than the collective group of renters.

It is impossible to defend these programs, and also complain about inequality, rich not paying their "fair share", whatever. Anyone who does so -- Bernie, E. Warren -- is a hypocrite.

Yeah well luckily those same folks are paying close to or sometimes beyond 50% in income tax

>not taxing appreciation on a home sale

That's what capital gains taxation captures.

There is an exclusion amount for personal residence where capital gains are taxed at 0% federally. It’s $500K for married couples at the moment. That is likely what GP was commenting on with that clause.

https://www.irs.gov/taxtopics/tc701

No, not really, as sokoloff stated, there is an exemption from capital gains tax on a primary residence up to a half-million in appreciation.

Prop 13 keeps California's property tax revenues stable.

This is especially true/important when property values crash, as they do every 10 years or so. (It's starting now as people start to realize that mortgages are going up from 5%, not down.)

Why? Because all of the people who bought more than a couple of years ago will see their regular 2% increase because the crash didn't hit their property's value. Meanwhile, newer homeowners will go to the assessor and get a reduction in value, which reduces their taxes. The former outweighs the latter.

...and is the reason why California is unaffordable

It may explain California to you but it doesn’t explain markets in other cities like Denver, Austin, or Phoenix.

Everything is expensive because housing supply is artificially constrained.

In Texas, if the house is your primary or "homestead" residence, then if the value of the property goes up by a factor of 2x in a year, then your assessed property taxes will only go up by 10% for that year. And 10% the year after, and the year after, and so on and so on, until the assessed tax value matches the property value (which will also presumably continue to increase, but maybe not by 2x every year).

So, typically the tax authorities will asses your home value one year and increase that, then your land value the next year and increase that, and the switch back to the home value for the third year, and just keep switching back and forth, and meanwhile pushing against that 10% limit as hard as they can every year.

But you do have to make sure that you get that "homestead" declaration filed correctly.

There are a number of ambulance-chaser type law firms in Texas that specialize in fighting tax assessments that increase by too much, and many of them work by taking the deal for free and then they'll split the savings with you if they win. Be careful who you choose in this space.

Characterizing the firms who defender homeowners from abusive hikes in their tax rates as being akin to "ambulance-chasers" seems completely backwards to me.

My tax rates seem essentially fraudulent and designed to bleed me dry. My comparisons include houses twice as large, in better school districts, with views, with pools, etc. The firms who help protect me from getting robbed by this bureaucratic exploitation are more akin to an honorable defense attorney protecting a wrongfully accused victim.

And of course, the whole notion of increasing property taxes is absurd. The government budget for next year should be roughly the same as this year. If house prices went up 10% that doesn't mean that the entire state government budget went up 10%.

They spam everyone in the state, and there are dozens of such firms. If you saw the spammy mailings they put out, you'd see why I see them as equivalent to ambulance chasers.

Yes, they perform a service, and I'm sure some of them are appreciated by some of their clients -- just like ambulance chasers.

My wife also happens to be a lawyer, and her opinion of them is lower than mine.

prop 13 might not be the root of all evil, but they're definitely bedfellows

No. Excessive spending is the major problem. They would spend 100% of all income / revenue if they could. And still complain it isn’t enough.

What do you mean by excessive spending? Is this the same California that has a $97 billion budget surplus? [1]

I honestly don't know what you're getting out outside of snide political commentary.

[1] https://www.nytimes.com/2022/05/13/us/california-budget-surp...

Both true! I wonder if you could have one without the other?

(Serious question.)

Not sure why you're getting downvotes, you're 100% correct.

As an outside observer into the Wild West that is California real estate, part of me wants to see Prop 13 repealed just to see what would happen. Personally, I think the only thing that would change would be property tax valuations as I believe that the effect it's had on building houses is virtually nil.

It’s unfortunate that instead of coming up with something at least a bit more sensible, they chose such an awful measure.

Because California allows direct democracy for their ballot proposition process and people will ultimately just vote for policies that are maximally destructive as long as it reduces their local costs.

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