New owner's property tax liability much higher than current owners.

[cathy63]

Quote:

Originally Posted by Freedom56 Not true. In California under Proposition 13: Property owners of at least 55 years of age may transfer the base year value of their principal residence to a replacement principal residence. The replacement must be of equal or lesser current market value and located within the same county.

Actually it's not even that restrictive. You described Prop 60, but Prop 90 allowed the movement of basis between counties that signed on to it, which included the most populous ones.

And now that Prop 19 passed earlier this month, owners over 55 will be able to move their basis anywhere in the state, and can even purchase a more expensive home if they wish to. I think Props 60 & 90 are essentially repealed as a result of Prop 19's passage, but IANAL and there may be some provisions of the earlier laws that will stick around.

[pb4uski]

Quote:

Originally Posted by pb4uski True... some of the schemes like in California and Florida to grant residents property tax relief can sometimes end up as golden handcuffs tying the owners to their long-term residences. The approach Vermont takes to make property tax relief an annual thing based on income makes more sense to me and doesn't end up handcuffing people to their properties.

Quote:

Originally Posted by Freedom56 Not true. In California under Proposition 13: Property owners of at least 55 years of age may transfer the base year value of their principal residence to a replacement principal residence. The replacement must be of equal or lesser current market value and located within the same county.

Quote:

Originally Posted by cathy63 Actually it's not even that restrictive. You described Prop 60, but Prop 90 allowed the movement of basis between counties that signed on to it, which included the most populous ones. And now that Prop 19 passed earlier this month, owners over 55 will be able to move their basis anywhere in the state, and can even purchase a more expensive home if they wish to. I think Props 60 & 90 are essentially repealed as a result of Prop 19's passage, but IANAL and there may be some provisions of the earlier laws that will stick around.

I'm not sure whether to be happy that taxpayers are not handcuffed to their properties as I originally thought they were or sad for all the other property tax owners that end up paying more to make up for those who get "protected".... the resulting inequities seem unjustifiable... like in the OP where a new owner will pay ~$8,600 vs the current owner's $2,600... seems like a Robinhood game.

I'm not sure which is worse... having some taxpayers pay many multiples of what long-term residents pay under these schemes or having people get squeezed by property tax increases to the point where they can no longer afford to stay in their home and end up having to sell the "homestead". Perhaps there should be a cap on the amount of benefit that one can receive from these programs.

[mountainsoft]

Quote:

Originally Posted by Camping Looked at a couple of properties in Florida on Zillow/Realtor. The seller's property tax liability was around $2400-$2700 a yr (I looked on the assessors page to verify) which I could easily afford with my modest retirement cash flow. Calculating what I would have to pay if I bought these properties came out to around $12K-13K a year, too high for my retirement cash flow. I'd expect to pay more than the current owner, but 4x as much?

I'm not familiar with Florida property taxes, but here in Washington state you can apply for a senior reduction if your income is below a certain level (once you turn 62). As I understand it, they freeze your property taxes at the current level (still not sure what happens if property values go lower), and you are exempt from "excess levies". In our case, that should knock about $2000 off our current $5000 property tax bill (1456 sq/ft house on 1.92 acres).

Until a couple years ago there was a fixed income level (40K if I remember correctly), but now it's a percentage of poverty level. Last I checked the cutoff was well over 50K, so we should qualify by the time I turn 62.

Depending on how much property values increase from the time my taxes are "frozen" and the time the property is sold when we die, it could end up being a big jump in property taxes for the new buyer.

[JustCurious]

Quote:

Originally Posted by FLSUnFIRE If the owner claims homestead, the assessment is capped at 3% or CPI, whichever is less. Up on sale, the property assessment will be based off FMV, and if the new owner claims homestead, future increases will be capped (there is also portability if an owner sells and buys within two years to transfer the accumulated reduction). The save-our-homes cap definitely makes me more comfortable with my budget as I approach FIRE.

This is the answer.

[pb4uski]

From a public policy and economic equity perspective it is hard for me to justify that forcing non-resident and newer resident homeowners to pay more and allowing long-term resident homeowners to pay less... and ofter far less... is a good idea.

Don't get me wrong, I'm not going to voluntarily pay more, but I just don't see it as a good idea from a public policy perspective.

Why can't we all just pay our own way/fair share?

[athena53]

Quote:

Originally Posted by pb4uski From a public policy and economic equity perspective it is hard for me to justify that forcing non-resident and newer resident homeowners to pay more and allowing long-term resident homeowners to pay less... and often far less... is a good idea. Don't get me wrong, I'm not going to voluntarily pay more, but I just don't see it as a good idea from a public policy perspective. Why can't we all just pay our own way/fair share?

I totally agree with this and pb4uski's post in the same vein.

When my first husband and I bought in NJ in 1984, property taxes as reported by the seller were sort of manageable (NJ is exorbitant to start with). After we bought it was re-assessed to the current value and the taxes went up substantially from what the sellers had been paying.

I'm in MO now and values are re-assessed every 2 years. They had to dial back the last assessment because people were getting 40% increases and they were overwhelmed with appeals (including mine). It got capped at "only" 25%.

Still, that seems a lot more fair. People shouldn't have to make the decision to stay in a house that's too big for them or otherwise doesn't fit their needs just to avoid a giant property tax increase. I'd rather see assessments kept up-to-date and affordability issues addressed based on income.

[Andre1969]

I had it happen when I bought my home in 2018. The property tax estimates on real estate websites put it at around $4700-4800 per year. So, imagine my shock when I bought it, and initially the property taxes were only around $3300 per year!

When the new tax bill came out for September 2019, it was back up to around $4700-4800 per year. I called to find out what happened. Turns out, that since I had bought the house in September of 2018, they accidentally gave me the previous owner's Homestead tax credit, which over time slows the rate that your taxes go up if the property is your primary residence. But, when a new owner buys the place, the credit goes away, and the taxes reset to the higher level.

It really wasn't that much of a shock to me, as the $3300 seemed too good to be true. But, I could see more extreme examples being a shock. Back in 2017, I had looked at a house, and the real estate listing said its taxes were only about a few hundred bucks per year! This was a $500K+ house. I found out that the person selling was a disabled veteran, or some similar category, where they got a huge break on their property taxes, and online, the real estate listing was showing that number, rather than what the taxes would be without the discount.

Just out of curiosity, I looked the house up online. Apparently it wasn't such a hot item, as it didn't sell until April of 2020, almost three years after I looked at it. And it only sold for $450K, whereas it was something like $533K or so when I saw it back in 2017.

The owner's tax bill was only $383, for years, but then for some reason for 2020 (due Sept 2019) jumped to $2291. And, the latest bill, for 2021, is up to $5547.

I guess I dodged a bullet when it came to that house. I remember it fairly well. It had a big master suite on the first floor, which is something I was looking for. And it had 3 more bedrooms upstairs, a 3-car garage, and was on 2.5 acres. But, it also had no basement, and looked like it was built on wetlands. Most of the property was wooded, and had that look to it like it would flood during a heavy rain. The area around the house and driveway was raised up, but it just seemed like an area that would stay damp. And, if I needed more area, such as extra driveway, more garage space, etc, it would probably be next to impossible to get permitting, because of the low-lying area.

[BeachOrCity]

The whole thread illustrates the value of using a "good" real estate agent. A good one could guide you on the likely taxes for any home you consider.

[meierlde]

In Tx at least property taxes are frozen at 65 but if you look up the property on the appraisal districts web site (by county) it will tell you the taxes without the freeze or exemptions. I suspect that many tax authorities do the same. So another step, is to ignore the taxes as posted on the estimate and check the tax authorities web site.

[Walt34]

Quote:

Originally Posted by pb4uski Why can't we all just pay our own way/fair share?

Because the definition of "fair share" differs widely.

Why should one persons RE taxes go up just because some rich guy overpaid for the house across the street? Hardly seems fair to me.

Why should people without kids have to pay for school taxes for other people's life choices? Doesn't seem fair to me.

...and the list goes on and on and on....

[pb4uski]

WADR my friend, you're being silly and petty.

Quote:

Originally Posted by Walt34 Because the definition of "fair share" differs widely. Why should one persons RE taxes go up just because some rich guy overpaid for the house across the street? Hardly seems fair to me. It doesn't... in fact if all properties in your jurisdiction go up 20% and the jurisdiction budget is the same then while your assessment goes up 20%, the tax rate goes down ~16.67% and your tax bill is no different... 100 * 1.000 = 120 * .8333... it is simple math. OTOH, if your property's value goes up more than the jurisdiction as a whole then you'll pay more because your property is worth more... and vice versa. Why should people without kids have to pay for school taxes for other people's life choices? Doesn't seem fair to me. Because society as a whole benefits from an aducated citizenry... that is why society pays for education... not whether we are getting our money's worth is a total separate question. ...and the list goes on and on and on....

[Walt34]

Quote:

Originally Posted by pb4uski WADR my friend, you're being silly and petty.

Yes, and I know it.

However a lot of people do not see it quite that way. That's the reason for all the property tax ceilings in CA and other places.

[pb4uski]

Quote:

Originally Posted by Walt34 Yes, and I know it. ...

I figured that.

[Aerides]

Quote:

Originally Posted by pb4uski From a public policy and economic equity perspective it is hard for me to justify that forcing non-resident and newer resident homeowners to pay more and allowing long-term resident homeowners to pay less... and ofter far less... is a good idea.

When the law was implemented in FL to allow portability, it was needed due to several years of run up in property values (the RE bubble). It reached a point where no one could realistically move.

If you'd bought a home in 2000 for say $200k, paying taxes that only increment a little, you were probably paying about $4k per year. Your home was now worth $450k. To move (presumably to something a bit bigger) and take on even a jump to a $500k home, you'd now be paying something like $17k a year in taxes. So it was holding people back. And moving/RE drives a lot of the economy, just ask Home Depot.

It held us back in 2006. We were looking but decided to forget it, as we didn't like the idea of paying crazy property taxes forever. Instead we remodeled. Of course as soon as the law went into effect the market went upside down but that's a whole extra story.

[2HOTinPHX]

Property taxes are crazy high. Perhaps we need to find another way? Below is comparing 2020 taxes for some Bay Area homes in Newark CA. These are all on the same street we grew up on. Many were still original owner occupied until the last few years. The homes were built around 1960. All homes are in similar shape and square footage. Average value is crazy $900,000 for average track homes. This is good if your selling but not so good if your buying. If it were not for prop 13 many original owners would have probably been taxed out of their homes.

Our Mom And Dads home....original owners....sold1961....$1,234.00

Sold 1986.................$3,830.00

Sold 2001.................$7,190.00

Sold 2004.................$8,963.00

Original owner...$1,174.00....just sold 08/18...now $11,153.00. That's almost $10,000 more a year.....[emoji32]...and that's every year forever. Plus they have a $888,000 house they*have to pay for.*

Why are California roads not paved in Gold?

[pb4uski]

Actually, $11k in property taxes on a $888k home is very reasonable 1.25%... it would be very reasonable rate compared to the east coast where rates are 1.5-2.5% IME.

My Florida home is 1.6% (no homestead benefits yet) and Vermont is 2.33% before homestead benefits.

Don't renters effectively subsidize these homesteading benefits as well since they are not treated the same as homeowners? I realize that opens a whole different can of worms... but just sayin.

[2HOTinPHX]

Quote:

Originally Posted by pb4uski Actually, $11k in property taxes on a $888k home is very reasonable 1.25%... it would be very reasonable rate compared to the east coast where rates are 1.5-2.5% IME. My Florida home is 1.6% (no homestead benefits yet) and Vermont is 2.33% before homestead benefits. Don't renters effectively subsidize these homesteading benefits as well since they are not treated the same as homeowners? I realize that opens a whole different can of worms... but just sayin.

Maybe it is just hard for me to accept that homes that originally sold for 13,000 to 15,000 are being taxed at almost that same rate annually now.

[Amethyst]

It's harder for me to swallow that a $13K crackerbox is now selling for almost a million. Then again I live near a development full of tiny 1960's houses, which Grandmas and Grandpas bought in the 60's for about $7K, and which are on the market now for $1.5Million.

We, on the other hand, have never done anything but lose money on houses.

Quote:

Originally Posted by JDPascale Maybe it is just hard for me to accept that homes that originally sold for 13,000 to 15,000 are being taxed at almost that same rate annually now.

[ERhoosier]

Late to the party here, but property taxes commonly go up after a home sale even without a big rise in the property's value. When I sold the first house I ever bought some four years later for the same price I paid, the poor buyer's property taxes still went up ~25% (despite the same 'homestead exemption' I had). And that was in a region that supposedly used market value-based property taxes. I even wrote a letter to the county assessor's office on the new buyer's behalf, but to no avail.
Sometimes you just can't fight city hall

[imnontrad]

That is common if the property value is determined by the most recent selling price. You could go around and find homes that are similar, find out their property tax amount and appeal for a lower amount. But you usually have a certain amount of days to appeal.