What will the repeal of Prop 13 do to the market?

[CA renter]

[quote=UCGal]I had to figure out what you guys were talking about with the step-up basis.

(I’m an engineer, not an investor… and I don’t sell houses a lot so I don’t think about capital gains on a daily basis.)

I’m trying to figure out what you guys are suggesting.
– If a person inherits a house (free and clear) the cost basis is that of the time of inheritance. This is done for establishing whether estate taxes need to be paid. In fact this can happen several times on a home if the estate is large – estate taxes may kick in on half the house if half the estate is above the threshold when the first spouse dies and they don’t have a trust.

– In my case I paid full market for the house. My dad was still alive. I’m not an only child. The proceeds were his and eventually I got some back as my portion of his estate. But he could have gone to Vegas and bet it all on Red. Prop 58 does not address the form of transfer – sale, inheritance, gift. All are allowed in a prop 58 transfer. Prop 58 does not address estate taxes. The feds and CA still require estate taxes if the value of the estate (including the market value of a home if there is one) are above a threshold.

I guess I’m not too worried about capital gains when I sell, since I plan on living here till I die… But to suggest that the cost basis should be different than what I paid (full market value), I don’t get it.

Or am I misinterpreting what you guys mean about the step up cost basis. Speak slowly when you explain… I’m not an accountant or investor. ;)[/quote]

LOL, UCGal. 🙂 You can run circles around me where numbers are concerned, to be sure.

Here’s what I was talking about:

When a parent dies and leaves a house to an heir, the heir can “step-up” the cost basis of the house to the current market price. So, if my mom bought a house for $50K in 1970, and she dies in 2005, with the bubble price being $700K, as an heir, I can “step up” the cost basis to $700K and when I sell it for $700K, I pay no capital gains taxes on it. The capital gains are $0.

If I sell it in 2030 for $1MM, the cost basis (or$700K) at mom’s time of death in 2005 remains the cost basis at the time of sale in 2030, and I only owe cap gains taxes on $300K ($1MM proceeds minus $700K cost basis).

Without this stepped up cost basis, if I sold at the time of her death in 2005, I would have to pay capital gains taxes on $650K ($700K proceeds minus $50K cost basis from 1970), rather than pay taxes on zero. If I sold in 2030 at $1MM, we’d be taxed on $950K ($1MM minus $50K), instead of $300K ($1MM minus $700K “stepped-up” basis at time of death).

This is about capital gains, separate from estate taxes.
—————–

I’m agreeing with BG because, as it stands, the heirs get the original cost basis for Prop 13 (so they pay much lower property taxes), and they also get to step up the cost basis for cap gains tax purposes (and paying lower CG taxes as a result). It’s like they step up or down the cost basis, and benefit in both directions. This should not be allowed.

I understand the taxes go to different entities (prop vs. income), but my point is heirs should pay taxes, one way or another, unless they sell immediately, rendering property taxes a moot issue. But they should not be allowed to hang on to the property forever while paying lower prop taxes, but then ALSO be allowed to have the stepped up basis when it comes to selling.

[ILoveRegulation]

[quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.

[ILoveRegulation]

[quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.

[ILoveRegulation]

[quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.

[ILoveRegulation]

[quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.

[ILoveRegulation]

[quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.

[Coronita]

[quote=paramount]1st Prop 13, then mortgage interest will be next after that.

Bottomline: Dismantling prop 13 will only serve to principally benefit gov’t workers and those on welfare.

Those are the groups that we who work in the private sector serve.

Instead of reducing or eliminating pensions and curtailing outlandish salaries for state and local gov’t workers and seeing that as the problem, Gov. Brown instead sees it as a revenue issue – even though we are already taxed at an incredibly high level!!!

Example: The City Manager of Temecula makes almost as much as the President of the United States!!

But instead they declare a state of emergency for the school system in California.

This is all being engineered by the gov’t worker unions in California. They are in complete control.[/quote]

ding ding…. WINNAR!

[Coronita]

[quote=paramount]1st Prop 13, then mortgage interest will be next after that.

Bottomline: Dismantling prop 13 will only serve to principally benefit gov’t workers and those on welfare.

Those are the groups that we who work in the private sector serve.

Instead of reducing or eliminating pensions and curtailing outlandish salaries for state and local gov’t workers and seeing that as the problem, Gov. Brown instead sees it as a revenue issue – even though we are already taxed at an incredibly high level!!!

Example: The City Manager of Temecula makes almost as much as the President of the United States!!

But instead they declare a state of emergency for the school system in California.

This is all being engineered by the gov’t worker unions in California. They are in complete control.[/quote]

ding ding…. WINNAR!

[Coronita]

[quote=paramount]1st Prop 13, then mortgage interest will be next after that.

Bottomline: Dismantling prop 13 will only serve to principally benefit gov’t workers and those on welfare.

Those are the groups that we who work in the private sector serve.

Instead of reducing or eliminating pensions and curtailing outlandish salaries for state and local gov’t workers and seeing that as the problem, Gov. Brown instead sees it as a revenue issue – even though we are already taxed at an incredibly high level!!!

Example: The City Manager of Temecula makes almost as much as the President of the United States!!

But instead they declare a state of emergency for the school system in California.

This is all being engineered by the gov’t worker unions in California. They are in complete control.[/quote]

ding ding…. WINNAR!

[Coronita]

[quote=paramount]1st Prop 13, then mortgage interest will be next after that.

Bottomline: Dismantling prop 13 will only serve to principally benefit gov’t workers and those on welfare.

Those are the groups that we who work in the private sector serve.

Instead of reducing or eliminating pensions and curtailing outlandish salaries for state and local gov’t workers and seeing that as the problem, Gov. Brown instead sees it as a revenue issue – even though we are already taxed at an incredibly high level!!!

Example: The City Manager of Temecula makes almost as much as the President of the United States!!

But instead they declare a state of emergency for the school system in California.

This is all being engineered by the gov’t worker unions in California. They are in complete control.[/quote]

ding ding…. WINNAR!

[Coronita]

[quote=paramount]1st Prop 13, then mortgage interest will be next after that.

Bottomline: Dismantling prop 13 will only serve to principally benefit gov’t workers and those on welfare.

Those are the groups that we who work in the private sector serve.

Instead of reducing or eliminating pensions and curtailing outlandish salaries for state and local gov’t workers and seeing that as the problem, Gov. Brown instead sees it as a revenue issue – even though we are already taxed at an incredibly high level!!!

Example: The City Manager of Temecula makes almost as much as the President of the United States!!

But instead they declare a state of emergency for the school system in California.

This is all being engineered by the gov’t worker unions in California. They are in complete control.[/quote]

ding ding…. WINNAR!

[Coronita]

[quote=ILoveRegulation][quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.[/quote]

Wahhhhhhhhh.. Wahhhhhhhh … Wahhhhhh..

My feelings are hurt. You called me retarded. Rich, can you ban ILoveRegulation/IForget/BigGovernmentIsGood (Just kidding)…

[quote]I say both individuals should pay the same rate. [/quote]

I’m glad you expressed an opinion in what you “should” do. However, I don’t think most people give a care about your opinion. I know I don’t… And fortunately, you’re not in position to actually effect any change to do it.

So like I said, enjoy wasting your time on wishing/hoping for “change”… Because it ain’t going to happen. CA can’t afford services, reverting prop 13 isn’t going do didly sh!t to solve the problems. And voters aren’t going to go for it frankly. And even if they did, special interests group would sue to keep it from happening anyway.

Heck, if we are going to talk about ridiculous/creative ways to raise revenue, I think CA just add a “renter” fee/surcharge. Call it a surcharge/double taxation/etc, but all people who rent should pay a rental/recovery fee to prop up the state. Considering that there are probably more renters these days than homeowners in CA, it would have a better shot generating revenues….

And any time some of the CA retirees want to give up their pensions to help reduce the budget shortfalls, great.

It’s so funny how hypocritical people are. It seems like everyone is so convinced they have the answer to solving the budget crisis, and their solutions always involves other people to pay more, EXCEPT THEMSELVES…..

[Coronita]

[quote=ILoveRegulation][quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.[/quote]

Wahhhhhhhhh.. Wahhhhhhhh … Wahhhhhh..

My feelings are hurt. You called me retarded. Rich, can you ban ILoveRegulation/IForget/BigGovernmentIsGood (Just kidding)…

[quote]I say both individuals should pay the same rate. [/quote]

I’m glad you expressed an opinion in what you “should” do. However, I don’t think most people give a care about your opinion. I know I don’t… And fortunately, you’re not in position to actually effect any change to do it.

So like I said, enjoy wasting your time on wishing/hoping for “change”… Because it ain’t going to happen. CA can’t afford services, reverting prop 13 isn’t going do didly sh!t to solve the problems. And voters aren’t going to go for it frankly. And even if they did, special interests group would sue to keep it from happening anyway.

Heck, if we are going to talk about ridiculous/creative ways to raise revenue, I think CA just add a “renter” fee/surcharge. Call it a surcharge/double taxation/etc, but all people who rent should pay a rental/recovery fee to prop up the state. Considering that there are probably more renters these days than homeowners in CA, it would have a better shot generating revenues….

And any time some of the CA retirees want to give up their pensions to help reduce the budget shortfalls, great.

It’s so funny how hypocritical people are. It seems like everyone is so convinced they have the answer to solving the budget crisis, and their solutions always involves other people to pay more, EXCEPT THEMSELVES…..

[Coronita]

[quote=ILoveRegulation][quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.[/quote]

Wahhhhhhhhh.. Wahhhhhhhh … Wahhhhhh..

My feelings are hurt. You called me retarded. Rich, can you ban ILoveRegulation/IForget/BigGovernmentIsGood (Just kidding)…

[quote]I say both individuals should pay the same rate. [/quote]

I’m glad you expressed an opinion in what you “should” do. However, I don’t think most people give a care about your opinion. I know I don’t… And fortunately, you’re not in position to actually effect any change to do it.

So like I said, enjoy wasting your time on wishing/hoping for “change”… Because it ain’t going to happen. CA can’t afford services, reverting prop 13 isn’t going do didly sh!t to solve the problems. And voters aren’t going to go for it frankly. And even if they did, special interests group would sue to keep it from happening anyway.

Heck, if we are going to talk about ridiculous/creative ways to raise revenue, I think CA just add a “renter” fee/surcharge. Call it a surcharge/double taxation/etc, but all people who rent should pay a rental/recovery fee to prop up the state. Considering that there are probably more renters these days than homeowners in CA, it would have a better shot generating revenues….

And any time some of the CA retirees want to give up their pensions to help reduce the budget shortfalls, great.

It’s so funny how hypocritical people are. It seems like everyone is so convinced they have the answer to solving the budget crisis, and their solutions always involves other people to pay more, EXCEPT THEMSELVES…..

[Coronita]

[quote=ILoveRegulation][quote=flu]until I’, consider support repealing prop 13 IF

1) those people enjoy those nice pensions consider giving those up

2) we stop giving social services/benefits to people who are not legal residence.

3) we stop giving in-state “tuitions” discounts to people who live in CA but are not here legally (versus someone here legally from another state)…
[/quote]

Lame post. This isn’t about an overall tax increase. It’s about whether someone who purchased the exact same property at a later date should be paying the same tax rate as someone who purchased the exact same property at an earlier date.

I say both individuals should pay the same rate. You disagree, and use some retarded logic to support your retarded position.[/quote]

Wahhhhhhhhh.. Wahhhhhhhh … Wahhhhhh..

My feelings are hurt. You called me retarded. Rich, can you ban ILoveRegulation/IForget/BigGovernmentIsGood (Just kidding)…

[quote]I say both individuals should pay the same rate. [/quote]

I’m glad you expressed an opinion in what you “should” do. However, I don’t think most people give a care about your opinion. I know I don’t… And fortunately, you’re not in position to actually effect any change to do it.

So like I said, enjoy wasting your time on wishing/hoping for “change”… Because it ain’t going to happen. CA can’t afford services, reverting prop 13 isn’t going do didly sh!t to solve the problems. And voters aren’t going to go for it frankly. And even if they did, special interests group would sue to keep it from happening anyway.

Heck, if we are going to talk about ridiculous/creative ways to raise revenue, I think CA just add a “renter” fee/surcharge. Call it a surcharge/double taxation/etc, but all people who rent should pay a rental/recovery fee to prop up the state. Considering that there are probably more renters these days than homeowners in CA, it would have a better shot generating revenues….

And any time some of the CA retirees want to give up their pensions to help reduce the budget shortfalls, great.

It’s so funny how hypocritical people are. It seems like everyone is so convinced they have the answer to solving the budget crisis, and their solutions always involves other people to pay more, EXCEPT THEMSELVES…..

[Author]

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