Posted on 11/15/2022 6:00:56 AM PST by AbolishCSEU
Almost a week after the midterm elections, San Francisco's Proposition M, a vacancy tax on landlords, is projected to pass. The San Francisco Chronicle called the race Monday afternoon. (SFGATE and the San Francisco Chronicle are owned by Hearst but operate independently of one another.)
The ballot measure is a warning shot at landlords who are sitting on multiple vacant units, but it includes some notable carve-outs that critics say will blunt its impact. Starting on Jan. 1, 2024, property owners with at least three units that have been vacant for more than 182 days (six months) will be taxed between $2,500 and $5,000 per empty unit. In ensuing years, that penalty will increase to as much as $20,000 per empty unit. The penalty money collected will go to a housing activation fund, which will subsidize affordable housing, including for individuals over the age of 60 in the city.
Single-family homes are exempt from the vacancy tax, as are landlords with only two empty units. Out of roughly 40,000 empty units in the city, the San Francisco Controller's Office estimates that 4,000 units are likely to qualify for the vacancy tax. One of the leading proponents of Prop. M, District 5 Supervisor Dean Preston, lauded its passage.
(Excerpt) Read more at sfgate.com ...
Or they can just perform a little magic in their accounting system and designate the vacant unit an “office”, “maintenance room”, “storage”, “janitor’s apartment”, etc. Those don’t count towards vacancy and the city of San Fransisco can’t stop landlords from saying every single vacant unit is a non-revenue unit. Their lender might stop them, but the city can’t.
Nah, it’s unenforceable. If they did try to enforce it, they’d have to set up another giant bureaucracy to audit every landlord’s rent rolls every month, which even the banks who have a financial interest to protect don’t do. And any landlord with an ounce of creativity will never pay a cent of these fines.
“Is this where John Pelosi lives?”
They probably refer to him as a “John” in the red light district but I think his real name is Paul Pelosi.
Puts me in mind, sorta, of the UK's bedroom tax...
That’s what the armed 87K new IRS agents are for.
Up to $20k/year vacancy tax? Umm…
$20k/12 = $1,667/month
Typical rent in SF? $4k/mo?
So, at peak penalty, the landlord/owner is paying a vacancy tax equal to 1/3 month rent each month to keep a $4k/month unit off of the market. Even less (as a percentage) if the unit rents for more. At $500, the monthly charge is $42/month.
Oops! Dropped a “0” in that last calculation:
At $5k, it is $417/month.
.........as a full time developer for over 40 years, I can guarantee that “NEW” projects will just STOP.
In some cases, construction already under way will just STOP.
Even in the best of time for landlords, and I once owned hundreds of units, owning, maintaining, renting of living units is no cakewalk.
We had a saying with respect to apartments....”if it has a bed in it, forget it” and develop/build something else.
Exactly, a one-day lease with a trusted legal entity on a vacant property every 5 months easily gets around this law.
= = =
How about being a professional ‘leaser’?
One month, or a couple of weeks at a time.
Rotate regularly. You can have continuous housing.
You’re not wrong. We still have a couple of recently rehabbed (by us) duplexes and an SFH. If Queen Hochul and Tish “Peekaboo” James get any worse, we will seriously consider a 1031 exchange in a southern red state.
LOL - he’s a john...
...........in the mid eighties, the Resolution Trust Corporation) (feds) CLOSED 747 insolvent Saving’s and Loans nationwide with total assets of 394 billion dollars.
Every Friday, for a year or two, thousands of houses in our local area were posted for sale on the back page (in real small font to get them all on the page) of the front section of our local newspaper. Generally speaking, the houses originally sold years earlier for in the 150 range. RTC foreclosed on all of them and realtors sold them for “in the TWENTIES”. RTC paid the realtors a full 6% commission too for each sale.
RTC still operates and it’s history proves beyond all doubt what CAN HAPPEN in the real estate market.
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