When are we going to see mortgages rates going up to 8-10%

NEW -> Contingent Buyer Assistance Program
[quote author="mikal1" date=1232106942]<blockquote>If your purchase price was too high, over market, you can go to the county and have your tax lowered.</blockquote>


Huh? Please explain how you do that? And hopefully we're not confusing the ability to apply for a temporary, new basis based on significant decreases in market value. And keep in mind that while that temporary, new basis is in effect your original basis (plus any interim increases) is still there, right next to the new one. And still being incremented each year. Then when your temporary, new basis expires, wham!</blockquote>




The new adjusted tax bill will have the new basis. It is not temporary.
 
[quote author="Woodbridge" date=1232120277][quote author="mikal1" date=1232106942]<blockquote>If your purchase price was too high, over market, you can go to the county and have your tax lowered.</blockquote>


Huh? Please explain how you do that? And hopefully we're not confusing the ability to apply for a temporary, new basis based on significant decreases in market value. And keep in mind that while that temporary, new basis is in effect your original basis (plus any interim increases) is still there, right next to the new one. And still being incremented each year. Then when your temporary, new basis expires, wham!</blockquote>




The new adjusted tax bill will have the new basis. It is not temporary.</blockquote>


It can be temporary if the market appreciates rapidly. After you have re-assessed downward, you could quickly be re-assessed back to your purchase value + 2% annual increases. Mika is correct, the potential for a "wham" is there.
 
Do you have a link or anything that I can read up on the potential "wham?" I pored over the tax collector assessor site, but the FAQ there only talks about reassessments to lowering property tax basis. Can you give me some insight whether the "wham" exists on both these situations:



A) Someone buys a home for $100k that last sold for $200k, the new tax basis would be $100k right? With no potential for the "wham."

B) Somone who bought at $200k asks for a reassessment and gets the basis lowered to $100k. This has a potential for the "wham?"
 
[quote author="Woodbridge" date=1232149656]Do you have a link or anything that I can read up on the potential "wham?" I pored over the tax collector assessor site, but the FAQ there only talks about reassessments to lowering property tax basis. Can you give me some insight whether the "wham" exists on both these situations:



A) Someone buys a home for $100k that last sold for $200k, the new tax basis would be $100k right? With no potential for the "wham."

B) Somone who bought at $200k asks for a reassessment and gets the basis lowered to $100k. This has a potential for the "wham?"</blockquote>


You need to review prop 13 and prop 8 (no, not THAT prop 8!).



Prop 13 values are established when one of several events occurs, your example A) is one of those, a transfer of ownership NOT between spouses or from parent to child. So a new prop 13 basis would be established for your property. In other words, it doesn't matter what the last owner paid for it or what the last owners prop 13 value was at the time of the ownership transfer.



For example B), this is where you need to understand that a prop 8 value is temporary. And that's what you're talking about here, the assessor establishing a temporary valuation based on current market conditions. So now you have two different valuations or basis for your property taxes - a prop 13 basis and a prop 8 basis. The prop 13 basis was established at the time of purchase, and it's been incrementing by a factor of not more than 2% annually (based on the California CPI). When January 1 rolls around each year the county assessor decides if they will use your prop 8 valuation or your prop 13 valuation for the new tax year.



So lets say they've been using the prop 8 (100,000) basis for several years, but now they decide that market conditions have improved to the point where your prop 13 basis is no longer greater than the properties current market value. They will now enter and use your prop 13 basis, but it's not the same basis that it was several years ago - it's been sitting there alongside your prop 8 basis and being incremented by not more than 2% annually (based on the CCPI). So you're going to jump from a 100k basis to a 200k+ basis.



That may not be clear, but all the information is out there. I'd provide links but I researched this some time ago and I'm not going to do it again (sorry).
 
[quote author="Woodbridge" date=1232149656]Do you have a link or anything that I can read up on the potential "wham?" I pored over the tax collector assessor site, but the FAQ there only talks about reassessments to lowering property tax basis. Can you give me some insight whether the "wham" exists on both these situations:



A) Someone buys a home for $100k that last sold for $200k, the new tax basis would be $100k right? With no potential for the "wham."

B) Somone who bought at $200k asks for a reassessment and gets the basis lowered to $100k. This has a potential for the "wham?"</blockquote>


Hopefully this can illustrate the "wham":



<img src="http://www.ipoplaya.com/proptax.jpg" alt="" />



Re-assessments down are temporary. If the market appreciates significantly, they can re-assess you back up to your original purchase value + 2% annual increases. This in an extreme example but does show the potential. Buyer B's basis and tax nut would be vastly lower for many years potentially.
 
[quote author="irvine_home_owner" date=1232156940]IPO: I think you have Buyer A and Buyer B switched on your example based on Woodbridge's post.</blockquote>


Yes, he does, but that's fine - his illustration has enough data to stand alone. But.... IPO, could you add a year 6 please? With yet another 50% increase in values? The reason I ask is that with the data you have in year 5 of your example, buyer "A" is still using their temporary, prop 8 valuation (which is accurate). If you show another 50% increase for year 6 then buyer "A" would revert back to their factored base year value (prop 13 value), and that would be the original value at purchase plus 2% annually, compounded.



I think (hope) that it would help to more completely and accurately portray the facts.



Thanks!
 
[quote author="irvine_home_owner" date=1232156940]IPO: I think you have Buyer A and Buyer B switched on your example based on Woodbridge's post.</blockquote>


Oof sorry, I wasn't referring to the post, just happened to slap buyers A & B on the spreadsheet.
 
[quote author="mikal1" date=1232158482][quote author="irvine_home_owner" date=1232156940]IPO: I think you have Buyer A and Buyer B switched on your example based on Woodbridge's post.</blockquote>


Yes, he does, but that's fine - his illustration has enough data to stand alone. But.... IPO, could you add a year 6 please? With yet another 50% increase in values? The reason I ask is that with the data you have in year 5 of your example, buyer "A" is still using their temporary, prop 8 valuation (which is accurate). If you show another 50% increase for year 6 then buyer "A" would revert back to their factored base year value (prop 13 value), and that would be the original value at purchase plus 2% annually, compounded.



I think (hope) that it would help to more completely and accurately portray the facts.



Thanks!</blockquote>


<img src="http://www.ipoplaya.com/proptax2.jpg" alt="" />
 
[quote author="mikal1" date=1232158482][quote author="irvine_home_owner" date=1232156940]IPO: I think you have Buyer A and Buyer B switched on your example based on Woodbridge's post.</blockquote>


Yes, he does, but that's fine - his illustration has enough data to stand alone. But.... IPO, could you add a year 6 please? With yet another 50% increase in values? The reason I ask is that with the data you have in year 5 of your example, buyer "A" is still using their temporary, prop 8 valuation (which is accurate). If you show another 50% increase for year 6 then buyer "A" would revert back to their factored base year value (prop 13 value), and that would be the original value at purchase plus 2% annually, compounded.



I think (hope) that it would help to more completely and accurately portray the facts.



Thanks!</blockquote>


Thanks guys, the illustration was very informative.
 
Here is a longer-term visual:

*Note that 50% annual losses or gains on real estate are a bit capricious, but included per request*



Assessed value will be the lower of the market value or Prop 13 cap.

After 50 years, the spread will have moved from $100K to $250K between Prop 13 caps.



<img src="http://irvinerealtorsite.com/taxes.JPG" alt="" />



You can tinker around with your own chosen "market" numbers here:

<strong><a href="http://irvinerealtorsite.com/taxes.xls">Tax implication spreadsheet</a></strong>



Enjoy,

-IR2
 
[quote author="IrvineRealtor" date=1232162476]*Note that 50% annual losses or gains on real estate are a bit capricious, but included per request*

</blockquote>


Ye of little faith... I think the next house I buy will appreciate 50% every year for 4 years prior to my retirement. I will sell at this top and take my ill-gotten gains to Arizona to live next to AZDave.
 
[quote author="ipoplaya" date=1232164417]Ye of little faith... I think the next house I buy <strong>will appreciate 50% every year for 4 years</strong> prior to my retirement.</blockquote>


I vote that your handle be changed to "double-down" immediately.



<img src="http://www.movieposter.com/posters/archive/main/15/A70-7583" alt="" />
 
[quote author="IrvineRealtor" date=1232165384][quote author="ipoplaya" date=1232164417]Ye of little faith... I think the next house I buy <strong>will appreciate 50% every year for 4 years</strong> prior to my retirement.</blockquote>


I vote that your handle be changed to "double-down" immediately.



<img src="http://www.movieposter.com/posters/archive/main/15/A70-7583" alt="" /></blockquote>


I am so money!
 
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