More than just asking, our readers are telling and we’re posting:
I think it’s high time we revisit prop 13. It’s obvious we’ll never be able to balance our budgets in the city and in Sacramento, which is no excuse but the restrictions that prop 13 has levied upon them seem unfair. I am a recent owner, 2000, and would not have been penalized by prop 13 having never been passed. How many of you agree it’s time to revisit?-J
Thanks “J”. Let’s see if some people can chime in on this and for heaven’s sake stay on topic, or at the very least, keep things civil.
–Proposition 13 [Wikipedia]
59 thoughts on “Suggest to us: Discuss Proposition 13”
this would certainly create some new inventory around here. aren’t you tired of paying 10-100x in taxes what your retired neighbors pay? this needs to apply to commercial property as well. they never should have gotten the protection of prop 13.
agreed on commercial. but the reality for residential is way more complicated. its not just long term owners who have benefited-look at the prices in the city over the last ten years for example. and suggesting that old folks just get a reverse mortgage sounds good for the govt. and mortgage brokers. letting those fiscally responsible politicians prey on sitting ducks (homeowners w/high transaction costs of selling and moving) sounds like a very bad idea.
no doubt that the unintended consequences of prop 13 have included making prices go much higher in CA. than they would otherwise; but to blame budgetary shortfalls on housing winners (“who can afford it”) sounds like bitter populism.
as for the neighbor paying less in taxes-so what? he paid a lower price too probably-do you want to adjust that?
so all of you prop 13 haters, i think you ought to just come out and admit that you want MASSIVE tax increases (but only on those assholes who bought property…). go ahead and tell us how our politicians will fix everything with this windfall.
california does not have a tax problem-ITS A SPENDING PROBLEM. prison guards and bus drivers make 2-4x what teachers make.
let the flames begin…
Let’s start with easy targets – properties valued over 10+ million and non-owner-occupied properties.
It’s really funny. Everyone who posts on real estate blogs favors dropping prop 13. I think that’s understandable because the majority of us are in the market or have recently purchased. We’re the ones getting screwed.
But if you look at CA’s population as a whole, the majority are either indifferent (e.g. renters) or “entitled” (e.g. retirees). That is why it will never get fixed in our lifetimes. If you recently purchased, in ten or fifteen years you’ll be on the pro-prop13 bandwagon, anxious to screw the new crop of buyers…
The most ironic part is the number of “protected” owners who get stuck inside inappropriate homes (too big for them after kids move out, too many stairs for old people, too far away from work or medical facilities, etc.). Yes, there are tax transfer opportunities for older folks, but there’s a serious penalty built in for most homeowners who wants to trade up, trade down, move closer to their new job, etc.
Too bad we’re stuck with this for life…
Prop 13 will never not exist, so why discuss? The majority of the city are renters.
I like the idea though of properties valued at $10mil+ though for a revaluation! Good idea!
slippery slope thinking there. after the $10 mil targets are gone, then what?
look at the brilliance of the AMT for guidance.
properties valued over 10mm already change hands enough to not make a difference. it’s all the suburban homes that were bought for 10k and are now worth 500k that would change the game. as for prison guards and bus drivers, i totally agree. but the cost of doing everything have far exceeded the ability to tax the people. the system is broken.
I post here now and then. I SUPPORT leaving prop 13 as is. I have owned my own house in SF now for 24 years.
No complaints. No problem.
I agree with Paco. spending is the problem.
And I didnt flame anybody. so there.
how much is your place worth now jamie, sans baby
what did you pay for it?
You’re not gonna drag that outta me. but i will say this: it’s worth approx 13 times what I paid for it..and we’re not done remodeling yet.
and no, that doesnt make me an evil homeowner. it just makes me grateful and lucky I guess.
The law sucks but the market has already factored in the economic reality. I’d rather see the state provide some ‘incentive’ for older home owners that are trapped in their houses to get out — which would free up supply.
so i take it your property tax bill going up 13x would crush you? or just slow down your remodel?
No, the 13 x property tax bill would not crush me, nor slow or stop my remodel. You’re trying to bait me. forget it.
The current law is the law, and a lot of people benefit from it. When I sell, and then buy another place at todays prices, I’ll have to deal with the new property tax.
Just like everyone else.
ok. i wasn’t trying to bait you, just trying to make a point. you are getting the huge benefit of paying nothing in taxes which you are leveraging to fix your place up and flip. good for you.
i hope you don’t have any kids because you’d see how sad a shape our schools are in thanks in large part to prop 13.
I think we see limits placed on Prop 13 during the coming recession. Probably an additional tax on homes worth over $1 million or something as long as the owners are under 65.
Ok james. thats it. the gloves are off. I worked my ass off to buy that fixer upper 20 some years ago. it was a dump. i saved and saved for a down payment.
After years of sweat equity and building permit hell, it’s getting done.
And you have the f’ing arrogance to think I’m leveraging the house to FLIP IT??
It’s my HOME, my domocile. I’m going to live in it for many more years, with NO intention of flipping it. you have a lot of nerve to throw out crap like that. And no, I dont need to have kids to know that the schools are a mess..for many other reasons.
think before you assume such crap next time.
another question here…
I read the wikipedia end to end .. dont really get all the ins and outs… .
but I read taxes are capped at 1% then I pay 1.2% in SF. how comes???
Overall, I’m not sure about which is best, to keep or to dump.
on the bad side, it’s the same song as the rent control: it FORCES people to live longer that they wish in a property that doesnt suit them. My major target being the seniors who are stuck in the house they love – but which usually isnt accessible (in the large sense of stairs, slopes, bedroom on the main floor etc). Yes, I speak for them – and for my 2 grandmas (91 and 95) – one of which changed address by swiching her living and her rental (that would assume everybody should buy their retirement address early on then rent it till it’s time to move. But then, it leaves a “grandpa house” to redo before renting it out. )
Hard to put all seniors in the same box as each of them will have different needs.
on the other side, I have to admit that the housing budget in SF is making me sea sick. The only way I could accept emotionally to buy is to have a fixed mortgage payment and a fixed tax payement. So we can actually plan a bullet proof budget for the 10 to 20 years to come.. when we’ll have college spending to add.
And I’ll point back to the fact that when people pay 3 times more property taxes, they expect 3 times better services – something that we dont see right now… and this makes people even more reluctant to increasing prop taxes.
I’m joining this conversation a bit late, sorry, but I just couldn’t stay silent on this issue. I’m a government employee in the South Bay area and a recent new homeowner here as well (and yes, we intend to ‘flip’ it). I hate Prop 13, straight up. It has put a strangle hold on everything that government has to do, which is way more than many people realize. And it affects everyone in the whole state, even renters. As the housing market tightens because supply is locked up by prop 13, the price of renting increases as well. Homeowners who want to remodel or even just get a SIMPLE building permit to replace a gas line or something have to pay more of the cost of processing that permit. Tax dollars impact our schools, roads, emergency services, social services, and land use planning ability. You want more from your government? Give them more to work with. I would gladly see my taxes rise more than the 1% annually allowed by Prop 13. That’s just basic economics, and if you can’t handle it there are other markets that will always be more affordable than Coastal California. Any time you F around with raw, basic, supply and demand economics everyone looses sooner or later.
as if more tax revenues have ever been used wisely.
the state has had booming receipts from real estate and the dot com era in the last ten years and still managed to fritter it away. give me a break. we have one of the highest state income taxes already. entrenched interests (yeah prison industrial complex, i’m looking at you again) are ruining our state. don’t believe the politicians and bureaucrats; they have not made it better when they were swimming in excess tax receipts and they never will.
I’m with Paco here. Why should there be an underlying assumption that a windfall would be put to good use? It wouldn’t. California needs a systemic top to bottom fix starting with the prison industry.
jamie, this is not about you. it’s about the millions of people and billions of dollars that people just like you represent. please try to abstract your own personal situation from the discussion. i was not trying to make you the bad guy or ask you to write a check. i am writing a 20k one every year and i presume your place is probably worth just as much as mine. you shouldn’t have to sell it nor should we ask you to in order for the state and county and city to get the revenue from you they need to stay in business.
see the post from jane. she’s living in the middle of this crisis.
prop 13 was a bad idea from day one and now we are all paying for it.
this is the comment of the millennium!!!!
“Any time you F around with raw, basic, supply and demand economics everyone looses sooner or later.”
way to go jade
Ah…I dont see any jane here.
dude, my comments were about me and my situation. get over it. your ignorant assumption about me “flipping” my home was just plain…. you get the point.
and FYI..we pay only about 4k a year in taxes. thats the law. that’s the way it is.
Well, good luck prop 13 lottery winners when the rest of us leave SF for cities that are fairer with the tax allocation and you have no one left to ‘cash out’ to. Certainly, people shouldn’t be losing their houses for regular non-payment of property tax (the city should attach a lien to the house to be collected after death, etc.), but people who happened to buy ‘x’ years ago shouldn’t get a free ride, either.
Frankly, I came back to SF after 20 years of living elsewhere and I’m sorry I did. I can’t believe how short-sighted and selfish this town has gotten. Criminy, cut out the “I got mine” attitude and fight for the future of this city. Can’t you see where it’s headed?
You know, I just can’t help myself and hafta keep chiming in. I refuse to be cast as one of the selfish “lottery winners” with regard to prop 13 and owning my own house.
I pay my taxes.
I’m remodeling my 104 y/o Victorian because it needs it badly.
I put in 6 street trees at my cost and pay to maintain them. It helps to beautify the ‘hood and everyone benefits.
I repaired my sidewalk this past year (the front and side) at my cost of $13,000, as required of property owners.
I pick up trash in my area. I help get rid of graffiti. I’m involved in a local neighborhood group.
I love this city. It’s my home, and I continue to do things to help improve it. I am neither selfish or short sighted. thank you.
Don’t sell yourself short jamielynn. You also chair your local realtor-hater support group.
but ur all sure gonna come a running to my door when I get ready to sell.
jamie, that is all good. if we didn’t have prop 13, there’s no guarantee that you’d have to pay as much tax as i do. the city would have to find comps in your neighborhood to justify the higher valuation, and even if they did, you could challenge it every year to say this isn’t logical for this reason.
just thought i’d throw that in there.
jane was a typo for jade by the way.
i’m not as perfect as you.
james. thats cool. all is good, I agree. just trying to enjoy this blog, have some fun, and throw out my 2cents worth. I may be full of shit, but who knows? I am opinionated. and so are you. I like that. means we engage in life.
i’m not as perfect as you think. but then again, i’m not a realtor.:)
just thought of something else. all that property tax, no matter how little or much, is deductable.
i need to do more homework to see if the lack of a prop 13 would even matter to a city/county like sf, where i presume we have had enough turnover in the past 10 years to be getting as much revenue from valuations as we can.
what if we got rid of rent control and prop 13 at the same time? you can rent out your beautifully remodeled vic for as much as the market will bear as long as we can assess it at it’s true value?
just throwing that out there.
check out this pro – prop 13 website. it made me realize i should have clarified my original note to alex that started this thread. i’m not suggesting we let the counties charge us whatever they want for the percentage of tax, only that they be allowed to assess the house/condo every year.
hope that helps clarify my crazy notion.
I think that Prop 13 should be revisited. On my block there are people who pay $30K in property tax and some that pay less than $1K. This kind of discrepancy is not fair. If you pay that much more, you should recieve more services or something. Anyway, I’ve felt that a minimum of 25%-50% valuation for the property tax would be more fair.
back during the supervisor daly election, i thought that we should get 1 vote per 1k in property taxes we pay. i’d rather fix prop 13 and the state budget than kick daly to the curb, which is saying a lot for me. i can’t stand that pathetic excuse for a human being.
What about a less radical solution: raising the annual percentage increase allowed under prop 13? I think it is about 2% now. Raise it to 3% — a very marginal increase fairly distributed on all prop owners — and you’d generate a whole lot of need money for the public schools.
SanFranTim gets the Clinton Triangulation Award.
I think his idea of moving the allowed increase to 3% is a perfect compromise. How do the long-term homeowners feel on that one? If we get a consensus here, I nominate Tim to write the Governator with his idea and our support!
PS I’m a former 2002 SF home purchaser who paid 20 times in taxes what my neighbors paid in comparable homes, who sold in early 2007 just before the major sh*t hit the fan and am currently happily enjoying my new carefree life as a renter — and no, it wasn’t a planned “flip” for those who like to make up their own back stories for other posters. And yes, I did grumble about how the schools and parks and streets and everything else in our fair city are broken and how my neighbors, bless their hard work and luck 25 years ago, were complaining just as much as me while contributing 20 times less than I to the cause.
Oh, and PPS:
FYI, one thing I do support about prop 13 is the notion of not pricing seniors out of their homes due to rising property values. So I’ve always felt any change should have some sort of protection for this segment. But the 3% solution I think is clean enough that it might not even need such a special clause.
let me get this straight. you guys want to make me pay 40k per year for my 2 million dollar condo instead of 20k and jamielynn will only pay 8k instead of 4k for her victorian which is probably worth 4 million or more?
just wanted to confirm how far you were asking me to bend over.
and please kiss me first next time.
hey kb- remember that they sold us on the lootery by saying the money would go to the schools. do not believe the hype. raising taxes will not make the schools better. fiscally conservative my ass (republicans, democrats, they are all the same-porkporkpork).
i notice that no one will address my assertion that california has had a couple of HUGE booms (dot com and real estate) in just the last ten years and still the politicians frittered that windfall tax revenue away. face reality- if they were not able to manage with huge extra revenue why do you believe that raising taxes will make the situation different?
you sound like a ron paul supporter paco
i have a suggestion. Why not be really fair and just get rid of property taxes altogether. Seems ridiculous on its face that people should pay taxes every year on their home! Then make up the shortfall in the fairest way we know.. ie income taxes.. or a sales tax.
PS.. And i totally agree with Paco. The bastards could manage our budget when they were making bank during the dot com boom and now this latest real estate boom. Cut spending. Leave our taxes alone.
now your talking brian. get rid of everything but a true flat tax on our incomes and offer no deductions at all. i’d be for that in favor of dropping property tax. i believe ron paul has been suggesting this for some time.
Question regarding seniors and moving. Arent we all entitled to a one time deal whereby, after the age of 55, we can move anywhere ONCE (in the same county I think) and keep our old prop tax base? Doesnt that take care of the seniors that need to downsize (assuming that they didnt take that deal heretofore?)
brian and james.
I’m not sure dropping the whole tax is wise – but in that idea, the tax can be related to the PROPERTY and not the VALUE of the property.
over a 1000 years ago, property taxes where a plain simple table.
one floor up = 2 gold coins
two floors up = 4 gold coins
three floors up = 7 gold coins.
out of cities, you’d pay your propety taxes according to the area of windows or length of front wall.
in the same way, figure out what criterias are appropriate to a property. Length of curbside is one (so the city gets the same amount of money to repare ALL blocks’pavement with similar length – the block being in china town or seacliff). For all I know, in europ they have an underoccupancy tax: you get a penalized tax if the number of occupants is way below what the sqfootage of the property is – encouraging people to put empty properties back on the rental market, and somehow empty nester to dowsize (which might work – or not)
taxing people on the value of an investment with UNREALIZED profits is not ok – nor is it fair to have 5 neighbors in a row of IDENTICAL houses pay different amounts (doesnt this sound like airlines pricing policies when no two travelers payd the same price on the EXACT same flight?)
Add waiver and exemptions if you want (all caduc in the way that you need to reapply for each each year) .. but work on those property taxes.
do you think if we had annual assessments it would have curbed some folks from borrowing all their equity year in and year out to go on vacations and buy big suv’s?
“i notice that no one will address my assertion that california has had a couple of HUGE booms (dot com and real estate) in just the last ten years and still the politicians frittered that windfall tax revenue away.”
Not exactly. If you’ll recall, during the dot-com boom, state budgets were passed without the benefit/necessity of selling bonds to cover operating expenses. I also recall schools being built and a lot of “deferred” maintenance items being addressed. SF spent a load of cash making schools wheelchair accessible – a legal mandate, not something that can be blamed on the board of supervisors. Auto licensing fees were cut by 2/3 during this time, also. Reversal of the fee discount is one reason why why have Gov. Arnold rather than Gov. Gray, if you’ll recall.
The housing boom occurred (at least in part) during or while coming out of a recession. While the bay area did mostly okay during this period, I don’t think rural counties – especially those that filed or considered filing for bankruptcy had much opportunity to fritter anything away.
david lazarus agrees with me
Seems a lot has happened here over the weekend! Glad the discussion is so lively.
Anyway, just a few more things I’d like to point out from my perspective, again as an employee of a local government agency and as a new homeowner in the south bay area.
First, there seems to be a little confusion on where prop 13 applies – it is state wide for California, not specific to San Francisco and not applicable to any other state in the nation. Since most of our property taxes fund things that are either directly or indirectly handled by the state, that’s where the bulk of our money goes, and is then redistributed to local municipalities to handle local issues. So the issue is larger than a $2 million condo vs a $425k victorian in San Francisco. People who own 20 acres in Santa Clara, or Humboldt or Orange are affecting the services you get in your local city. This tax creates what used to be known as “landed families” by allowing trusts to pass land from parents to children without being reassessed. People in the Bay area can own over $10 millon dollars of property and maybe be paying tax on $500k. I pay that same tax on my 1/10 acre lot. Is that fair? Maybe. I mean, those grandparents worked hard long ago to ensure their children would be taken care of, right? Those children now have no incentive to sell the land, and less to invest in improvements on it since that would trigger reassessment. So the rent them out and the properties deteriorate. (We have several situations like this involved with our code enforcement division, and personally, it makes me crazy. Professionally, that’s just life under Prop 13)
Also, if this it isn’t fair to tax someone on an unrealized gain in value, why do 49 states in the nation do it that way? Yes, property is expensive in California, and yes there are probably places where the State and Local governments could do a better job with spending, but curtailing tax revenue is not the answer. Each bump in revenue has also followed a boom in population, and therefore an increase in expenditure. Living wages, health care expenses, seismic retrofitting, improved road surfaces and improved teaching and curriculum in schools, which would you suggest the government cut so you can keep your tax break?
Seriously. It’s not about street trees and graffiti. This is a much, MUCH, bigger issue than that.
thank you for making this discussion hit home. i don’t think we could stomach the abolition of prop 13 but i do think we should amend it to allow for that 1% basis to be realistic (annually assessed), not a once in a lifetime/sale basis only. i don’t know if that would make much of a difference however. it would be too radical to suggest anything more of a change however, imo.
prop 13 gives people an incentive to stay in their subsidized prop tax situ- which constricts supply which drives up the prices which encourages the development of more supply which then sells for a higher price point than it would (barring 13) and therefore produces way way more tax revenue for the state than would otherwise have been generated. AND STILL the govt. cannot make do. look at spending folks. if you think the govt. is being fiscally responsible then convince me. otherwise i believe raising taxes will just be throwing good money after bad.
and jade, for all those families with 20acres there are many more who sold out to developers who then put homes on your 1/10th acres example and created way way more taxable property (and revenue) and at much higher prices. you are barking up the wrong tree.
i’m sorry paco but i have ZERO sympathy for someone inheriting a property they cannot truly afford. sell it!
james, i’m with you there but i don’t think that has anything to do w/what i wrote above…
If commercial/industrial property owners (i.e., non single-family residences) had seen their property assessments increase at the same (Prop 13-tamped-down!!!) rate as single-family homeowners, California would be collecting $15B (that’s billion) a year MORE in property tax. Now let’s see what our shortfall is this year … $14B … wow … so we’d be putting $1B INTO schools, police, libraries, prisons, etc., instead of taking $14B out.
In 1978, the year Prop 13 passed and the market-based rates froze, single-family homeowners paid 40% of all property tax, while commercial/industrial/etc. paid 60%. Now, the proportions are reversed. We, the homeowners — even with retirees paying less than the newbie next door — are paying 60% of 30B, while businesses and landlords are paying 40%. Do the math — if our $18B represented 40% of the pie, the whole pie would be $45B … and they’d be paying $27B … instead of $12B.
Why don’t politicians talk about this? Because it’s political suicide. The Jarvis PAC goes after them with double full-page ads. Who’s paying for those ads? We are — with the $15B that commercial interests have quietly pocketed.
How can they do this? Property is not revalued until it’s sold under Prop 13. And every clever commercial property holder has carefully ensured that this property is held by a company/partnership/etc. that can be sold … without the underlying property technically changing hands!
Still with me? Email the SF County assessor’s office and ask what the deal is in San Francisco County — do the math for yourself. I did it for San Mateo County (where I live) and discovered that we’re “lucky” — due to all the new building, our percentages only went from 50-50 to 60-50 … leaving landlords and businesses a mere $200M richer in our neck of the woods … Or more, since the new stuff is just covering up for the old … for a while.
Anyway, the fight shouldn’t be between retirees and new prop owners. It should be all of us asking why commercial property can’t be brought up to market value if it hasn’t been through an arm’s-length transaction every 25 years. The small, retired landlords who are sure to bleat could be allowed to defer their increased tax — with a lien created against their property when it does change hands for the deferred tax at a reasonable rate of interest.
Done. Fairness. Prop 13 intact for the folks it was supposed to protect — elderly homeowners. California budget balanced. Schools funded enough to maintain our status as 45th out of 50 instead of dropping to last.
Any chance that we, the people, have more political will than the politicians?
great post jennifer. why not start a petition to exclude commercial propery from prop 13? i’ll sign it. if enough people sign it, which your argument tells me would, this could be a great way to show the legislature that they do not have to fear being crucified for suggesting the change.
Thanks, James, for your vote of support. I think it will take individuals, checking it out for themselves (e.g. in SF County) and writing their officials directly. That’s more than signing a petition, I know.
I just got my in-laws to check out Santa Clara County, where they live. There, it began at 50-50 in 1978 and has dropped to 68-32 … even with all that new development in the Silicon Valley. (Heck, it was ORCHARDS when I worked for Apple in the ’80’s!)
Incidentally, I meant San Mateo had fallen to 60-40, not 60-50, by 2003. Though, since Santa Clara has fallen another 5 since then, no reason to think San Mateo isn’t down to 35 … by now.
Anyhow, PLEASE take a look at your county’s number … and if you care about kids, the elderly, the poor … WRITE your state reps. THANKS!!!!
nice jump jennifer; *and if you care about kids, the elderly, the poor …* please…
just b/c the state gets more tax money does not mean that they will use it wisely-in fact they have proven the opposite.
i guess we know where paco stands on this issue. presuming he’d rather punish the kids and elderly and poor for electing bad politicians or for being ambivalent about them. either way, not cool paco!
i sent a note to arnold about this. let’s see what he or his office has to say.
Prop 13 needs revision. Like social security, it assumes that new homeowners will subsidize the older.
The tax discrimination is ridiculous. You are forcing future families away from living in the city which means less, students, and less per student funding – this is why schools are shrinking.
Existing homeowners will rent out rooms or buy additonal property to leverage their cheap tax situation and basically become landlords (probably mostly illegal).
New homeowners are forced to rent out rooms to just make homeownership poosible (also illegally)
So we just overcrowd our city without investing in the necessary infrastructure to support it. We simply encourage behavior that continues to milk the system rather than investing in the community we call home.
Meanwhile, this puts stress on public resources as single family homes are shadow apartments.
I’m sorry to have to say this but just because you have lived here a long time doesn’t entitle you to stay if you can’t afford it. Realize some of the gain in your net worth and move somewhere affordable. Make a rentable space to cover your costs.