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Curious about buying home at a huge discount & future taxes
Posted by: samintx
Date: May 19, 2009 06:44PM
Ok, you get a great deal on a home but what happens in the future when the home goes up in value and the taxes skyrocket? Another housing debacle?
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Re: Curious about buying home at a huge discount & future taxes
Posted by: Filliam H. Muffman
Date: May 19, 2009 07:22PM
Buy a house in California. The voters passed a law to try to keep taxes from going up too fast on homes because of appreciation.



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Re: Curious about buying home at a huge discount & future taxes
Posted by: Carm
Date: May 19, 2009 08:08PM
Yup, when you buy a house in California, taxes based on sale price not market price. Capped at 2% per year. Bought my current house last year at 350K sold two years before at 580K.
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Re: Curious about buying home at a huge discount & future taxes
Posted by: Lee3
Date: May 19, 2009 08:25PM
Yes big labor hates prop 13. It should be "their" money the school teachers unions say. They don't give a damn about the retirees that bought their house for 70k 30 years ago and would have to sell it to pay the taxes if they had to pay taxes based on present value.
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Re: Curious about buying home at a huge discount & future taxes
Posted by: testcase
Date: May 19, 2009 10:48PM
"what happens in the future when the home goes up in value and the taxes skyrocket?"

Drop pant, bend over sad smiley
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Re: Curious about buying home at a huge discount & future taxes
Posted by: Mike Johnson
Date: May 20, 2009 12:03AM
Quote
Lee3
Yes big labor hates prop 13. It should be "their" money the school teachers unions say. They don't give a damn about the retirees that bought their house for 70k 30 years ago and would have to sell it to pay the taxes if they had to pay taxes based on present value.

Yeah, that's it exactly.

Here's a proposal: when your property is reappraised so it can be used as collateral on a loan, that's the new value. If you bought a house for 70k and it's paid off, good on you. But if you refinance it at $700,000 to pull equity out of your house, then it's wealth, and the taxes you pay should reflect that.

Or hey, we could even cut home owners some slack there. Really, Prop 13 was about utility companies owning and holding huge swaths of land -- land which they use as collateral against billions of dollars in loans and financial instruments. A chunk of land can count as a $100 million asset, but the utility pays taxes on it as though it was worth a fraction of that. I suggest that if they have property appraised at $100 million so they can borrow against it, that they pay taxes that reflect that value.

California spends about $3400 per person per year. It has to come from somewhere. Since property taxes are kept artificially low for the fortunate few who bought houses 30 years ago, we all pay more in sales and income taxes. As a result, we get gigantic swings in state revenue whenever consumer spending or employment rates change. When the economy turns, we face huge budget shortfalls. Sound familiar? A little twitch, like the IRS stimulus check, means an unexpected windfall. It's impossible to predict.

Besides, the way it is, in one house you have a sweet old lady who is worth a million dollars (thanks largely to her house) and she pays $600 year in property taxes. And in the identical home across the street you have a family with a net worth of $20,000, paying $7000 per year in property taxes. Yeah, that's fair.
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Re: Curious about buying home at a huge discount & future taxes
Posted by: threeprong
Date: May 20, 2009 06:32AM
Mike Johnson, Your point is way to logical to be seriously considered as a basis for law.
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Re: Curious about buying home at a huge discount & future taxes
Posted by: davester
Date: May 20, 2009 09:31AM
I too agree that prop 13 was grossly unfair (and its ramifications still are). The people of California were fooled into thinking it was all about saving older homeowners from unsustainable tax inflation. However, that was a very minor part of the proposition, tacked on to gain the support of the voters...it was primarily about reducing costs to commercial and industrial property owners and one of the important ramifications was that now new business owners where property is involved have a great deal of difficulty competing with those who have held property a long time because of inequitable tax treatment. There were a number of more reasonable alternatives offered that directly and equitably mitigated the unsustainable tax inflation for homeowners but the prop 13 people were not interested in that. One of the most equitable and logical ideas was to freeze taxes upon home purchase but to have any appreciation related taxation difference come due upon sale. That provided complete equity among all homeowners so that not just the new homeowners shouldered the burden of financing local services. I still think this is what should replace prop 13. There are outlandish differences in what the people on my street pay for public services. I pay about $8,000/year....several of my neighbors pay about $1,500 and several new neighbors pay about $15,000. WTF??



"In science it often happens that scientists say, 'You know that's a really good argument; my position is mistaken,' and then they would actually change their minds and you never hear that old view from them again. They really do it. It doesn't happen as often as it should, because scientists are human and change is sometimes painful. But it happens every day. I cannot recall the last time something like that happened in politics or religion." (1987) -- Carl Sagan
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Re: Curious about buying home at a huge discount & future taxes
Posted by: Speedy
Date: May 20, 2009 09:47PM
Property taxes suck big time. There should only be a progressive income tax and no other taxes.



Saint Cloud, Minnesota, where the weather is wonderful even when it isn't.
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Re: Curious about buying home at a huge discount & future taxes
Posted by: davester
Date: May 23, 2009 11:17AM
Quote
Speedy
Property taxes suck big time. There should only be a progressive income tax and no other taxes.

<sarcasm>Nicely elucidated argument,</sarcasm>



"In science it often happens that scientists say, 'You know that's a really good argument; my position is mistaken,' and then they would actually change their minds and you never hear that old view from them again. They really do it. It doesn't happen as often as it should, because scientists are human and change is sometimes painful. But it happens every day. I cannot recall the last time something like that happened in politics or religion." (1987) -- Carl Sagan
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