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Comment by smokinn | Hacker News Reader

Prop 13 limits property tax to the value of the house when you bought it unlike most places where you pay property tax on the current value.

So what happens in other locations is that demand for locations starts going up, housing prices go up, taxes go up and people who can't pay those taxes get displaced. Developers buy those houses, raze them in favor of apartment complexes and eventually you get density.

If people can stay in their single family 1.5 or 2 million dollar homes and pay property taxes on the 30k they bought it for 30 years ago density won't happen because those are the people that vote and they'll keep voting for municipality limits on building to "keep the character of the neighborhood".

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> Prop 13 limits property tax to the value of the house when you bought it

No, it restricts increases in the basis value to which the tax rate is applied to a maximum of the value after purchase (or other qualifying event) + 2% per annum.

> unlike most places where you pay property tax on the current value.

A number of other states have Prop 13 like limits to the annual increase in tax basis value, and some others do full market valuation but split the increases over a several year period so that the tax basis value lags the increase, and other places just have fairly infrequent reassessment except at purchase (which, in effect, also causes tax basis value to, on average, trail behind increases.)

dragonwriter covered most of the details, but they key one he missed in Prop 13 is that every other homestead law I am aware of has an owner occupancy requirement that Prop 13 lacks. In Florida, which has a very generous homestead law, the ad valorem tax limits apply to the owner-occupied primary residence. You move and rent the place, your valuation spikes up to market rate. Own two houses? Pick one, because the other is getting taxed at market rate. It also does not apply to commercial property whatsoever.

Because of California's lenient qualifications, someone who bought that $30k house can move to North Carolina and collect massive rent checks without seeing their property taxes jump to reflect reality. The owners of apartment complexes have a vested interest in keeping their properties as they are, since a major renovation or addition would trigger a revaluation. Same for owners of office and retail space who aren't big enough to cut tax deals with the various levels of municipal government.

Those older than 55 can also apply their previous tax to any home they buy of equal or lesser value when they move.

The alternative is people being priced out of the house they lived in all their lives. I consider that a worse outcome.

I don't. Keep in mind being 'priced out' in this case would still mean they'd get a hefty chunk of change for selling the house.

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