In California we have something called Prop 13. Now don't quote me on this because I can not be specific about the details but, it's a very messed up law.

Yes, it does protect the homeowner, but at the cost of the neighborhood, the schools, the roads, and it keeps dilapated houses in very nice areas AND, it has been one of the big reasons for the obsurd prices for housing in California.

Let me explain. Prop 13 pretty much says, when you buy your house, your taxes on that house are pretty much fixed for the entire time you own the house as your primary residence.
- So lets say you bought a house in 1980. The taxes that you pay on the house today are pretty much the same, (marginal increase) as it was in 1980.
So if you bought a house for $250,000 at 1.25% tax. your paying about $3K a year in taxes. Now your neighborhood as increased in value, significantly, and the houses next to you sell for $1mil.
-- That means your neighbor, who owns the same or very similiar house, is paying $13K/yr. in tax for the same value of home.

-- As such, many people refuse to leave their homes even when they can not afford to maintain them properly. We have $5mil homes in Hollywood parked next to falling down shacks. Because of this tax Prop, it's not affordable for people to move because the taxes on their "new apt" would be three times the taxes on "their old house".

- Now yes, many people will argue, that no one should be forced from their home because they can't afford the taxes in the area. But I say, that the rest of the community should not have to be forced to subsidize the "old home buyers" cost of living in the neighborhood.

- The cost to maintain the streets has gone up, school costs have gone up, all public works cost more. And it's the granny, living in the 5000 sqft. home who does not even have a gardner and the house has not been painted since 1980, that is keeping the area in a "run down" condition.

I would rather pay more in real estate taxes and have my area be beautiful with good streets, sidewalks, and houses that don't look like they are going to fall off the hill and into my backyard.

B

-- I know we were talking about income taxes.. sorry to change the topic.. But just wanted to give another view of housing taxes.

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"When two people agree on everything, one of them is not necessary" - Arliss