Property Taxes - Plutocratic SF Inbox

Remember the California Property Tax Revolt?

On June 6, 1978, California voters overwhelmingly approved Proposition 13, a property tax limitation initiative. This amendment to California's Constitution was the taxpayers' collective response to dramatic increases in property taxes and a growing state revenue surplus. - Assessor's Office County of San Luis Obispo

That's just to get you warmed up to hear what California Bob has to say about property taxes:

SF property tax increases are capped using some formula like "lesser of CPI or 1.5% per year." It's like rent control for property owners. I was paying my property taxes and started digging around on the tax website.

Picking a random block near me, with all pretty similar, typical Sunset crap shacks, I found that taxes on the street ranged from $962 per year to $19,600 -- a 20x difference. My own block ranges from $2800 (for a large duplex, interestingly) to over $18K. Happily I'm nearer the lower end.

Scanning Nancy Pelosi's neighborhood, taxes on this $8 million place are about $4500/year -- considerably less than we pay, and equivalent to about 5 basis points on value. Surprisingly inequitable for a city committed to progressivism (TBF this is state law, not local)

This comes from properties remaining in the family for generations. So Cal voters recently passed a proposition which will limit heirs' ability to inherit their parents tax base. Unless the heirs make it their primary residence, the tax base will reset. So if you keep the property as a second home, or a rental -- no tax protection.

I can't help but feel this will increase property turnover. For single family homes, some heir will have to make it their primary residence, or face tax resets. The greater impact will be on rental properties, which have their own rent protection. I see owners dying, taxes resetting ten-fold higher, and the kids realizing that rent control makes it uneconomic to operate, and they have to sell. Haven't seen much movement yet but that's my theory.

BTW rental properties with existing tenants are dirt cheap here. Running a rental in SF is an investment death sentence.

Random residence in Pelosi's neighborhood 1

Random residence in Pelosi's neighborhood 2

Notes:

BTW - By The Way

CPI - Consumer Price Index

SF - San Francisco

TBF - To Be Fair

basis points - A basis point is primarily used to denote changes in interest rates. Common abbreviations of the term include “bps,” “bp” and “bips.” One basis point is equivalent to one one-hundredth of one percent. In other words, 50 basis points equals 0.50 percent, and 100 basis points equals 1 percent.