Actually, that’s a fallacy. The new condo doesn’t come with market rate taxes; Not now in any case. Higher than the old place, yes, but still not market rate.
The changes in this bill are well understood as are the consequences. this has been under discussion since the mid 80’s when the standing flaws and business “advantages” in prop 13 became obvious.
Since when are insurance policies audited/reported? Let’s look at a real example: Auto insurance… Which, in California, is really driver insurance, but let’s call it auto insurance.
You register a car. You have none of certain classes of violations on record. DMV doesn’t send out a poll to all insurance carriers to find out if you’ve paid for an insurance policy. Certain violations required proof of insurance be filed, but other than that, they have no way to know. If you have an accident and CAN’T show proof. Now we’re back to gaming the system
If you buy a car and have a loan, the leader will require you to carry a policy and it WILL satisfy the state requirements.
BTW, in the state of California, if you don’t own a car, you still are required to carry an insurance policy. The insurance companies call it a non-owners policy. This is another way some try to game the system. Just so they have no accidents, they get away with it. If they do have an accident, and have no proof of insurance… Their license WILL be suspended and part of getting it back is to show proof of ownership of a policy (California form SR-22, issued by the insurance company and checked regularly by DMV for a period of time).
Notice the ONLY time insurance is audited is in event of detected violations of the requirement to carry a policy and that is an audit of the individual, not the insurance company as a whole.
Anything else becomes quite invasive, in effect “we’ll catch everything and innocence be damned”.
I live in the Bay Area too… I have most of my life. I pay reasonable taxes on a property I (and the bank) own. They are based on the purchase price plus a reasonable escalation. The next owner, when I sell, will do the same.
Businesses on the, other hand, invented a new game fairly quickly in the prop 13 game:
Buy One Speer Street in San Francisco for $5,000,000 (all dollar amounts are non-factual)
Year one - sell 20% interest in say one spear street in San Francisco for $2,000,000. Partial interest sales do not trigger re-assessment.
Year two - sell 30% Interest in the building for $4,000,000. Property values have risen and Still no re-assessment and 100% of the original investment has been recovered plus 10% profit.
Year three - sell another 20%. Values are spiking so this time we get $6,000,000. A significant profit has now happened for the original buyer and 70% interest has transferred to the new owner. STILL no re-assessement.
Year four - Now we sell the final 30% for another $6,000,000. We now have over $7,000,000 in profit for the investment of the original buyer, 100% of the interest in the property has transferred to a new owner and the tax assessment for the property never changed in spite of an overall selling price over triple ($19,000,000) the original $5,000,000.
The numbers used are to illustrate the principal and NOT accurate, but this really happened with this is exact property in the city of San Francisco.
Just this one instance deprived the city of millions in taxes that COULD have been used for social programs, road repair and other infrastructure needs for the citizens of San Francisco. Instead those dollars went into the pockets of those businesses and off shore tax havens.
Please explain. If A sells his house to buy a condo from B, what keeps B’s condo from being assessed at the market rate for tax purposes (which A then pays)?
As things stand in California, under prop 13, even the re-assessment is capped. That is it has been since the passage of prop 13.
The proposed split role for commercial properties won’t be subject to that cap.
Maybe you and I are talking past one another, because I don’t understand your assertion. My understanding is that if you sell a house, any new buyer (person A in the scenario above) pays tax at the current (=new) market evaluation of the house. Here’s what the California tax board says:
In most cases, when a person buys a residence, the entire property undergoes a change in ownership and 100 percent of the property is reassessed to its current market value.
Except many people sell and buy a smaller home and pocket the difference.
Yes, that can happen. But the basic idea is sound and clear: your home is not an investment.
Yes, here is what the tax board says:
Proposition 13 adjusted base year value will increase the property taxes. Conversely, if the current market value is lower than the previously assessed Proposition 13 adjusted base year value, then the property taxes on that property will decrease.
Notice the statement “proposition 13 adjusted base year statement”. It’s kind of gobbledygook wording (gotta love lawyers), but this brings the taxes to levels below what someone who hasn’t bought a house might expect, even with the re-assessment for change of ownership.
Part of the problem with the wording in the FAQ is that you have to go back to the original language of prop 13 to understand that even re-assessment is limited; It’s not explicitly stated in the quoted language from the tax board FAQ. The limits aren’t as much as some might like, but it prevents the tax increase from choking off re-sales… i.e. I have a $7000 property tax and on resale it becomes $21000… THAT isn’t allowed to happen.
The BOE seems to think that the default new base value with a new owner is the purchase price, but if you have a way to make it substantially less when you’re buying a house then more power to you.
But again, that’s not “the increase in my nut”, that’s monetizing the SIZE of my house by downsizing. I could do that at any time.
I could move to a smaller house, or to a more distant, less desirable neighborhood, or to some place with lower taxes and shittier services, and on and on – but that’s selling part of the value - giving up part of a home’s value for cash. It’s NOT converting the (inflated) price to cash.
Trading a more valuable home for a less valuable home and pocketing the difference as cash can be done at any time, and isn’t a function of “appreciation.” It’s not an investment yield, it’s converting a (presumably) unwanted asset to cash.
(And it’s still no argument for tripling anyone’s taxes based on some what speculators (might!) pay for similar properties.)
I’m not sure you understand what an appraisal is or how houses are valued for tax purposes.
It is NOT “what some speculator (might!) pay.”
It’s based on what other people in the neighborhood have paid, recently, for comparable homes. And each home is then adjusted for its own characteristics that make it more or less valuable.
I haven’t heard you try and argue that there should be zero taxing of property. So given your agreement that it’s ok to tax people on the value of their property when they bought it, there is no good reason not to tax it accordingly as the value changes.
You pretending you can’t take out equity as real cash with the increased with the value of your house is laughable.
So if I sell a $2 million house in SF (8.5% city taxes) and move to the exact same house in Sacramento (8.75% city taxes) that costs $750,000 - same size, same desirable neighborhood, similar services - and pocket the difference, you’re trying to argue that’s NOT an increase in your nut?
OK, sure. Good luck with that.
But then you’re in Sacramento.
I am living proof that’s not true.
We bought in 2005. Sold for a $250k profit in 2008 before the crash. Rented until 2011. Bought a significantly bigger, better place for less than our original house. We’re now about $350k richer because of it.
Again, equal neighborhoods, roughly equal taxes, equal services.
Or are you trying to guess the perceived value of something outside of the home’s value?
The people who’ve bought similar homes recently in my neighborhood ARE speculators (mostly of the teardown/McMansion-ize variety). And so the appraisal guesstimate IS based on what a speculator might pay for my lot, since they’re the only ones paying that kinda money.
(BTW, I lived with a banker for 26 years, so I do know a fair bit what an appraisal is and how assessments work. But thanks for making the effort to try to 'splain. 
)
Nor will you.
But… huh? What does that have to do with anything?
But…that doesn’t follow, logically. At all.
Ah, wait, I see the difficulty: No, I DON’T agree that “it’s ok to tax people on the value of their property when they bought it.”
I agree that it’s okay to tax people on the price they paid when they bought their house.
But that might or might not reflect the value. Maybe they got a bargain - a lot of value for a low price. Maybe they overpaid for crackerbox construction with fake foam columns.
But the tax is on what they paid, not on some third-party estimate of the “value” based on what “similar homes” nearby have recently sold for.
I do NOT agree that it’s okay to raise peoples’ taxes based on what an assessor estimates someone else MIGHT pay IF the property were sold today.
But the value didn’t change.
The estimated price that someone else might pay has certainly gone up – but that’s not its value. (Its actual value has, if anything, declined slightly due to some deferred maintenance issues and the Continuous Ongoing McMansion Construction Zone: Now In Its Fifth BIG Year!)
“Nowadays people know the price of everything and the value of nothing.”
— Oscar Wilde (Still crazy after all these years.
)
See my reply to a similar comment above.
It’s those people, sitting on investments that could be homes, who are making it impossible for people to buy homes of their own.
Forgot about that. Where I live, zoning is regulated and types of buildings do get allowed or disallowed and local residents are heard, but their actual power to prevent rezoning isn’t that big. Unless they are upper middle class or richer. But then the lots are usually priced outside the range of “normal” people.
