it’s not a non-answer. my 1.something rate will also get better over time, because we shift the burden to a younger person who wishes to buy. my answer is that two identical houses should have an identical tax burden.

so no credit to existing residents similar to homestead in other states? Can we then reduce the payroll tax with all that extra revenue?

any credit to existing homeowners is just a subsidy from those with the misfortune to be born later. i don’t feel any younger people owe me that.


but yeah, seems like you could change the total tax balance with such a change. either lower overall property tax or lower income tax or lower sales tax or any combination.

Its a subsidy because the existing homeowner payed more based on a favorable tax law that’s going away so your making them whole. Make it a one time deal potentially. Agree on the rest. Now we’re getting somewhere.

the existing homeowner only paid more because you’re drawing a line in a specific year. over the same number of years of ownership, a person with the misfortune of being born after the existing homeowner will always pay more (both nominally and as a proportion of their wealth from the home). there’s no debt that a younger person needs to pay to make an older homeowner whole.

The line is every year after prop 13 passed in the 70’s. This sounds more like your advocating hosing older folks that played by the rules and payed a highish pay roll tax for decades and now a high property tax in retirement. With zero thought on making whole. See the problem? The intent of Prop 13 was to keep people in thier homes in retirement. I agree like any other law there’s downsides.

The problem with getting rid of prop 13 or any homestead exemption in other states amid that regular people at one time bought homes for regular prices. Then the market went bonkers several times over the years and essentially priced out the homes for generally everyone but the wealthy. It does screw younger people, but it also screws the original owners of those homes in the sense that they can’t afford to move as they could no longer afford the tax on their same home if it were re-appraised at market value. Damned if you do, damned if you don’t. Particularly in CA where they will raise your taxes no matter what the policy is. Those smelt need to be protected somehow.

There's a one time exemption to move within the state and keep the same property tax burden. With caveats. Yeah removing red tape and building seems to be the way forward currently. Home values in ca should start normalizing as the boomers pass along medium term.
I’m actually wanting my property value to come down a bit more.There’s been a slow 10-15% correction already which is good. Don’t want a tank or more appreciation.

Identical means same sales price, in which case they would pay the same.

It’s not fair to repo paid off property because taxes spike due to comps.

If most buy a house at the same % of their income then the taxes stay commiserate with their salary.

If young people can’t afford the tax then they don’t buy and that corrects the home value.

Assessing and taxing unrealized equity is sounds ridiculous and a cap gains tax at sale should be favored over taxing equity.

But this is also why you get such expensive govt in CA, most of the population doesn't see any additional property tax burden, just those who have come lately. If my neighbor still had the 1990 police/fire station services, then it'd be more fair, but everyone gets the same service, but just for ridiculously different prices. Prices go up, property tax revenues roll in whenever property actually changes hands.

High House prices leading to the high property tax initially are the problem in ca right now imo. It’s frustrating.

Like other places there’s been a lack of building since the Great Recession. Builders didn’t want to take risks for several years after. Couple that with Covid building shutdowns and were in an unbalanced supply/demand market. All the state legislators can do is remove red tape lowering risk and cost for builders. Maybe throw in sub 1% property tax for first time and veterans. IMO that should be the focus. Not advocating property tax increases.

Yea, property taxes existed to tax the rich back when property was used to generate cash flow, and poor people didn’t own anything to pay a tax on.

In the south it was used to pay for the civil war, in the 1800s it was too hard to try and tax the cotton revenue so just tax the dirt that produces it and exempt the home.

Since property doesn’t necessarily produce cash flow anymore and we aren’t in the 1,800s anymore there are much fairer ways to have a progressive tax for local services.

AMEN!

What is even worse is the people grandfathered in with low taxes keep voting for more services with absolutely no consequences since their tax is locked in.

Recipe for disaster.


.

I would probably be for removing the ability to leave the same burden to hiers. That way it could just die on the vine over time and you’re not forcing retirees (that contributed high payroll for decades) to sell.

at least their kids can inherit the low tax rate and continue to ******* those behind them.

not to me. identical means identical value

it’s as fair as charging others higher taxes for the same asset.

now look at home prices vs income over the past 40 years

yep. screwing those with the misfortune to have been born after you

i don’t think it’s ridiculous at all

Good news. A crash pad roommate’s dad just moved back to ca from Phx. That means you and I (younger) just shifted the tax burden to an older person. Lol. Sorry couldn’t help myself when he told me.

It's a ridiculous exit tax. First, only applies to $30 millionaires, why not everyone? Or no one? That's hardly equal,protection of the law. Second, if I decide to move to a lower tax state, where does Cali have the right to chase my capital? Since when is moving to another tax jurisdiction a "loophole"?

if you have gains as a california resident, it’s logical that those gains get taxed by california.


as for equal protection, there’s a long history of progressive taxes being acceptable

What happens when you leave the state and your portfolio subsequently goes down, are you given that money back by CA?

Yeah prop 13 exists for a reason, and it's still a very good reason in 2025.

You play by all the rules, pay taxes and mortgage for decades and then the government seizes your home at age 75 because some arbirtary website like zillow posts a very large number associated your address?

I'm sure there are ways to rationalize taxes for local services without taking away retirees homes. But without prop 13 you literally could not plan for your financial future (other than planning to move to to Reno).

This is one of the reasons that I'm like "Eff Dave Ramsey" on paying off the house early... there's only two entities who can ever actually "own" your house, and you are not one them. They'll just let you live there as long as you keep paying your "rent" (mortgage & property tax).

The way to deal with prop 13 is when grandma sells her house or dies. The tax man collects all the latent property taxes that were never (under) paid upon sale or inheritance. This would help moderate the price of homes (surely), would enable grandma to not get kicked out of her house, but would also prevent the forever-arbitrage situation that we have now, wherein people are collecting massive premiums on a property tax bill that has not been paid. It's one of the main things slowing me down from moving there: I don't want to pay someone else's tax bill from 1985.

I get the original intent of prop 13, but it's now having crazy knock-on effects and unanticipated consequences. It has turned CA into a real-estate cartel, and it's become a modern feudal state.

sounds like a tough problem to pay taxes based on the size of your asset. i guess the “too bad, you should plan better” approach only applies to those born after existing homeowners.


instead, you take advantage of low tax rates on the backs of younger people while enjoying immense real estate wealth.

at first glance, i could get behind this.

I believe Oregon and I’m sure other states do this. Not bad but again there is downside. There would need to be some sort of transition phase. Not just make all houses equal tax burden based on value tomorrow. Removing the ability to pass along the tax burden to heirs would be a good place to start imo. That already happened with all but primary residence years ago.

It’s not based on age. At all. I thought the example I provided might help you understand this.

is this where we pretend that there is no correlation with age and home ownership, as if the natural cycle of a finite life doesn’t exist? there will always be exceptions, but in general, people born later will buy their first home later.

and at the same time pretend people born later are making the same $. I get today’s current snapshot home values in ca have outpaced wage gains. But that was not true at all in 2008-2015ish.

have you ever heard the phrase, “the exception that proves the rule?”

the fact that there was a short period in a down market in which wages weren’t outpaced by housing costs doesn’t negate the fact that since prop13, there’s been an insane divergence of wages and housing cost.

it sounds like you believe the high cost of housing in ca is solely due to prop 13? I’m not sure that’s necessarily the case. It’s a factor for sure but there’s other factors such as finite land on the coast, higher paying tech, biomedical, defense, film, music, ect…
This is true in the northeast as well and they don’t have a prop 13. I’m fairly confident that if prop 13 went away tomorrow and we kicked all the retirees to Reno it wouldn’t lower prices much. Maybe initially but in a short time they would be right back to higher than most states.

not at all. the cost of housing has many factors. prop 13 is one. prop13 is a travesty irrespective of other housing cost factors.

Can’t completely disagree although I don’t view it as a travesty. It’s well intentioned legislation that’s ran its course. It has been chipped away at for years. None of which has lowered values. Initially it applied to commercial and every residential property owned. Those both went away and now if the ability to leave to heirs goes away I’d be fine right there. Agree to disagree.

Here is a fun tool to experiment with. It's some research project a college kid did that shows the effects of prop 13 on the California real estate market.

https://www.officialdata.org/ca-property-tax/
https://www.officialdata.org/ca-prop...61221313478,19

You can zoom in on any neighborhood you like and you can see the property tax differential that is in effect across the entire state. The effects of this tax law are felt across the board, though prop 13's responsibility for causing those effects, IMO, is not well understood. Most states' tax laws tax real-estate equally. This one does not.

One of it's biggest effects is to discourage selling a home if you're a long-time owner. It makes much more sense to keep it and rent it out at market rate indefinitely than it does to sell it. It's created an artificial scarcity, and we all know econ 101 supply and demand. This, more than anything else - including CA's restrictive and onerous regulatory environment - is what makes home ownership in CA so difficult for new comers.

Yes. That’s why leaving the burden to heirs went away for rental properties. It’s going to take some time but eventually rentals will all get reassessed. If you were to remove prop 13 and just make all properties pay tax based on value tomorrow guess what. Rent is going up.

i love checking around palos verdes to see $5m+ cliffside estates with $800 property tax bills.

the neighbors on either side are paying $150k and $70k a year.

as a half measure, eliminating the inheritability and the portability (taking your tax rate to a new home purchase) would be okay, if not my preference

If the tax suddenly goes from a $300K house in 1984 to a $2M assessment…many of those property owners would be forced to sell and relocate. That being said, there is no shortage of home sales in the Bay Area. Many sell within a few days and voila, new assessment. Many families set up trusts with property. Not sure what happens to heirs and taxes when those trusts are distributed in CA.

I checked the house I grew up in, and its property taxes are the same from when it was first sold in 1974 (or whatever the upper adjustment based on prop 13 has limited it to). It has never been sold by the original owner. They pay $2,300/yr in taxes and homes in that neighborhood rent for $5,000 - $8,000 per month. That's a net difference of between $57,000 and $90,000+ (every year) that those owners reap due to a law that gives them leverage which is not available to other people. In other words: it gives them legal, permanent arbitrage.

And while it's true that you identify the loophole has been "closed" for rental properties, if you dig into specific properties and look at a random sample, you will notice that a non-trival number of homes' legal owners are trusts - i.e. ownership entities that undergo no reassessment - ever. So while some rental homes may be reassessed, in practicality it is far, far short of "all." The guilded class knows what they are doing.

Most other states deal with this issue effectively WITHOUT something egregious like prop 13.

1) Homestead exemption during your working years reduces the tax burden of the appraised value AS LONG AS YOU ARE ACTUALLY LIVING IN THE HOME. Full taxes due if it is an investment property.

2) Age 65 your property tax gets locked in. No seniors get their homes taken away. Fixed income people paying fixed property taxes and get to keep their home.


.

I don’t know enough about how property trusts are structured to have an educated opinion on that but it looks like a loophole that should be closed.
Houses are reassessed in ca. 2% annual max increase. You could simply increase that 2% over time making prop 13 irrelevant approaching 100% at some point in the future so it doesn’t take 75 years for the tax to double. That way folks will know thier max tax numbers in retirement. It solves most transition off prop 13 issues. Rent will be going up. No more cheap rentals because the owner has no mortgage and cheap tax.
Never thought I would be discussing ways to increase my taxes but I do agree with alot of the negative consequences posts.