Skip to comments.Market Closing Prop. 13 Commercial Property Tax Gap
Posted on 01/07/2014 12:40:49 PM PST by WayneLusvardi
Almost 36 years after it was passed by voters, controversy continues to swirl around Proposition 13, the 1978 tax limitation measure. Periodic calls to repeal or modify it, supposedly to gain more tax revenue, so far have gone nowhere.
The main objection is that its unfair because homeowners and especially businesses that have held their properties for decades pay less in property tax than new property owners. Prop. 13 assesses taxes at 1 percent of value, plus a maximum of 2 percent more per year due to property value increases and inflation.
Property is reassessed when it changes owners, meaning new owners pay at what usually is a higher valuation. However, currently the longstanding commercial property tax gap created is being rapidly reduced by the natural turnover of properties in the market. That is what the Los Angeles County Assessors Annual Report for 2013 indicates. (See the graph on p. 12 of that document.)
The percentage of commercial properties with old base-year assessments has dropped from 75.5 percent in 1980, to 33.0 percent in 1990, and to 16.3 percent in 2013. If this trend continues, the commercial and single family residential assessment gap would be reduced to zero by 2020.
(Excerpt) Read more at calwatchdog.com ...
There is a way to transfer property from one company to another such that the property does not get reassessed. I believe that it involves creating a temporary holding company combining the seller and purchaser.
That this loophole is not continuing to be used suggests that businesses are just plain stupid.
Either that or the statistics being reported are not really true.
PAY YOUR FAIR SHARE!!!
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