FLU – let’s say MyCorp buys a strip mall, holds it for 10 years and then decides to sell it to you
if you buy the strip mall outside of MyCorp, real estate has changed hands and is subject to tax re-assessment
if, on the other hand, you buy MyCorp, then no real estate has changed hands for tax purposes
this is a major flaw in Prop 13 IMO – the city should be able to reassess the tax basis on commercial property at some regular interval – 3 yrs, 5 yrs, ???
another flaw with Prop 13 is that residential rentals are not re-assessed on a regular basis
let’s say I have owned a 10 unit property for 20 years and you buy the 10 unit property right next door tomorrow – I am paying taxes based on my 1988 basis but collecting rents at 2008 rates – your tax bill will be based on 2008 basis – the tenants in my building are creating just as much need for taxpayer-provided services (streets, sewers, police, etc) as the tenants in your building but the city is getting much less in taxes-per-tenant from my building
seems fair to me that the city should be getting the same amount of tax-per-tenant from both buildings
IMO California will have to revise Prop 13 at some point so more taxes can be raised from existing properties – I see two changes:
1. commercial property gets re-assessed on a periodic schedule regardless of who owns it or how many times it has or hasn’t changed hands
2. residential rentals, whether multi-unit or single-family, should be treated the same as the commercial properties – ie, tax re-assessment on a regular schedule whether the property has sold or not
