Prop 13 locked property tax to the sale price of the home. It’s since been partly repealed, with a grandfathering of those who owned their homes while it was in effect.
The way it affects housing is that people would normally move when the appraised value of their home causes their tax to exceed their budget. But Prop 13 keeps that from happening. If they do move, they lose their grandfathering and have to pay the prevailing tax rate. That’s huge. If you are paying $1.6k on an $80k Prop 13 valuation, sell, and buy a smaller home for $650k, your tax goes up to $13k. So it makes more financial sense to live in your big house until you die.
Fully repealing Prop 13 would essentially evict a lot of fixed-income seniors, or force them to take out reverse mortgages to pay their property tax, which could jump to 20k-30k in many metropolitan areas. The political fallout would be disastrous for whatever politicians supported the repeal. Seniors are the block of people most likely to vote. That’s why Prop 13 will endure until those grandfathered have passed on.
Prop 13 locked property tax to the sale price of the home. It’s since been partly repealed, with a grandfathering of those who owned their homes while it was in effect.
The way it affects housing is that people would normally move when the appraised value of their home causes their tax to exceed their budget. But Prop 13 keeps that from happening. If they do move, they lose their grandfathering and have to pay the prevailing tax rate. That’s huge. If you are paying $1.6k on an $80k Prop 13 valuation, sell, and buy a smaller home for $650k, your tax goes up to $13k. So it makes more financial sense to live in your big house until you die.
Fully repealing Prop 13 would essentially evict a lot of fixed-income seniors, or force them to take out reverse mortgages to pay their property tax, which could jump to 20k-30k in many metropolitan areas. The political fallout would be disastrous for whatever politicians supported the repeal. Seniors are the block of people most likely to vote. That’s why Prop 13 will endure until those grandfathered have passed on.