CA: Bill seeks some cut in property taxes / 14-fold increase in..exemption..first-time homebuyers

OC Register ^ | 1/12/05 | Jeff Collins

[NormsRevenge]

A UC Irvine grad hopes to put the dream of owning a home more within reach by cutting property taxes.

Freshman Assemblywoman Audra Strickland proposes to give first-time homebuyers a 14-fold increase in the homeowners exemption. Other government officials say the idea may be too complicated and too costly to pass into law.

Strickland, 30, who graduated from UC Irvine in 1996 with a political science degree, acknowledges that her bill still needs tinkering. But she believes the problems can be ironed out.

"With the prices of houses skyrocketing, this was a way ... more people can own a home," said Strickland, R-Thousand Oaks. "If we can reduce the property-tax burden, ... then I think more people will be able to buy their first home."

The exemption, as it has stood since 1974, gives all homeowners a $7,000 reduction in the assessed value of their principal residences. The lower assessment is used to calculate annual property taxes, saving each taxpayer about $70 a year.

If passed, Strickland's AB62 would increase the exemption to 25 percent of the home's "full value," shaving roughly $1,000 off a typical California property-tax bill. The savings on a median-price home in Orange County could be $1,350.

Strickland, who wants the savings to apply only for first-time homebuyers, said the idea came while campaigning door-to-door in her district, which includes parts of Ventura County and the San Fernando Valley. Voters kept bringing up housing costs as an important issue, she said.

Ventura County home values increased 46 percent in the past two years, one of the biggest jumps in the state, according to home-tracker DataQuick. Orange County prices increased 41 percent.

[stopem]

How many people in California are able to spend $300-$400K for their first home? What are wages in California these days to be able to afford the high prices for fixer uppers and condos?

Or is there some serious creative financing going on out there?

[GeronL]

interesting

[drt1]

"If we can reduce the property-tax burden, ... then I think more people will be able to buy their first home."

This is one of the craziest things I've heard to justify more Gov't intervention into the home market. Lowering taxes will just increase the price of housing! I'm for lowering taxes but lowering them for this reason makes no economic sense. Maybe this legislator should go back to college and get a degree in Economic (Start w/ Econ 101)

[Rusty0604]

I had to pay $270K for a tiny condo, I just hope the prices don't freefall before I can make a little profit on it and move somewhere less expensive.

[Old Phone Man]

Homeowners are not only socked with property taxes, but school taxes. You don't notice it that much when it is included in your mortgage, but when you totally own your own home and have to write out a check every year, the amount is outrageous.

Make RENTERS pay some school tax. Even a hundred dollars a year would help.

We're retired, never had kids, and have to pay several thousand in school tax every year on our tiny, modest home. Not fair!! Make renters pay something!!

[Who dat?]

What are wages in California these days to be able to afford the high prices for fixer uppers and condos?

That’s exactly the question I want answered. And here, you’re not talking $300,000 - $400,000, you’re talking more like $700,000 and up. I have no f-ing idea what they do for money, but they’re doing something.

is there some serious creative financing going on out there?

I know a lot of people get those interest-only loans. They pay only interest for some length of time. Then (historically, at least) by the time they sell in 4 or 5 years, their home value has doubled and they can sell it and get something out of it (above the loan amount).

I suspect that even with shenanigans like that they’re in debt to their eyebrows.

[Republic Rocker]

$300-$400..are u kidding? More like $700-$800 for a fixer here in Lost Angeles....(THANK the Lord I OWN!)

[skip_intro]

And they don't just have the houses. They also have two new or newer cars, and often an RV or a boat to boot, not to mention a vacation home in the mountains or desert.

[TruthConquers]

Most of the time people own condo's first. We did.
As soon as we bought it, the next phrase the prices fell and we were unside down for 8-10 years. When the prices went back up, we sold and moved into a house.

It is very tight. No two new cars, not even a cell phone, or credit card debt. The vaule has incresed more than 20%, but that wont mean anything until we sell and who knows what it will be like by then? And we refuse to re-finance our equity.

And I stay home and homeschool.

[markman46]

we do through the rent we pay to the property owners WHo doi pay property taxes

[Old Phone Man]

I'm talking about SCHOOL tax, not property tax.

People who own real estate pay both taxes.

I can see property owners paying property tax, but everyone should help pay the school taxes. It is not fair to sock a homeowner with a bill of several thousand a year in school tax while renters pay NOTHING. Renters could at least pay a hundred or few hundred a year.

[markman46]

you mean to say that when you get the tax bill it's not broken down where all it all goes, ie schools,county, state
or do you pay each one separately

[Old Phone Man]

People who pay a mortgage do not get tax bills. The tax bills go to the mortgage company. Your monthly mortgage payment includes your house payment and interest, house insurance, school tax and property tax.

The mortgage company puts aside the money to pay the taxes and pays them when they get the bills.

We own our house so we do not pay a mortgage. That means the tax authority mails the tax bills directly to us. We get TWO bills, first the whopping school tax (several thousand dollars per year on our humble 2 bedroom, 1 bath castle), and then a couple of months later we get a slightly less whopping tax bill for property taxes (a mere thousand a year). That means we have to get our checkbook out and write TWO tax checks.

Again, I can see homeowners paying PROPERTY taxes, but EVERYBODY should chip in for the SCHOOL tax. Just because we own a house does not mean we are billionaries.

[markman46]

then the rent is paying school taxes indirectly when they pay rent, because the property owner is paying all the taxes, unless they get some type of exemption, cause as a renter I pay a lot for rent over 1100.00 of a 800 sq ft 2 bedroom bandbox.so I hope my rent is going to pay for all the stuff home owners have to pay.. I thing I'll check with the owners

[doctor noe]

"This is one of the craziest things I've heard to justify more Gov't intervention into the home market. Lowering taxes will just increase the price of housing! I'm for lowering taxes but lowering them for this reason makes no economic sense. Maybe this legislator should go back to college and get a degree in Economic (Start w/ Econ 101)"

You must not live in California. Lowering property taxes will more than likely have no effect on housing prices. Prices will remain high out here as long as the demand exceeds supply. The California housing market is unlike any other in the country. Lowering property taxes would actually create a positive supply-side effect on the California economy. Right now, it appears that the only thing that could cause downward pressure on housing prices is higher interest rates. There is no way to predict what effect lower taxes would have on prices because there are so many other factors that would override its potential effect.

[drt1]

I've lived in Marin County and I know the Ca RE Market - It is as you say, insane. However, lowering taxes on Real Estate will do nothing for supply - It will increase demand, raise prices and thereby raise supply. Lowering RE Taxes will simply increase the affordability of housing at a given price level, thereby increasing the number of potential buyers (Demand) and, in the end, this demand results in increased prices.

This Legislators objective of increasing the affordability by lowering taxes will do little if anything to actually improve affordability in the long run. It will actually raise the price of housing with all of the benefits of the increased affordability (Prices) inuring to the Seller! (All other things equal)

[Mr. Jeeves]

Well, maybe the Legislature should instead encourage home builders to come to California and build as many homes as we need to meet the demand.

~maniacal laughter~

[Never2baCrat]

I totally agree. Let's take it a step further. Make those that have the kids pay the taxes for the schools. Why should my wife and I who don't have kids, pay for someone else's brat to be "educated"?

[Uncle Hal]

I live in Sonoma County in the SF Bay Area. The average price of a home in this county is around $525,000. In the city of live in it is around $600,000. This is cheap for the bay area. For $400,000 you would get a 80-90 year old 2 bedroom one bath bungalow with maybe 1000SF. I do not know how young people can buy a house in this area. As interest rates rise home prices will drop but the mortgage payments will not because the higher interest will mean bigger or same payments.