It’s also not necessarily a legal strategy even as a Hail Mary.
California’s state Supreme Court ruled in 2001 that jury nullification is not a valid decision… and my understanding is if the outcome case can be attributed to “jury nullification” (i.e. could be as obvious as the defense suggesting it as an avenue to the jury, which ironically itself is legal, or as technical as the jury refusing to consider or explicitly refusing a piece of evidence that is entered in the record— think a moral objection to the law, or “evidence undeniably shows the defendant left the scene at 7pm, but we the jury contend it was 6pm”) it legally would be considered a mistrial and allowed to be re-litigated— and the sole person who has the power to attribute something to jury nullification and/or declare mistrial? The judge.
Not necessarily true based on the locality. In Dallas, for example, assessed value will (usually, unless you buy in all-cash off-public-market) be set to your market price when you buy it.
From there tax basis more or less tracks market value, but it’s possible to protest the assessor to keep it below market value (though it’s time intensive and requires in-person hearings).
To get ahead of any artificial attempts at deflating tax basis, Dallas also maintains a comprehensive public lot value database that assigns a land value for tax purposes based on census tract (initially likely a product of redlining, but now based on average census tract market value) — so, similar to a pure land value tax, even if you’re sitting on an unimproved piece of land, you’ll still be taxed similar to the average home in the neighborhood, which has the effect of setting a tax floor.
Austin is similar, I believe. Most cities have to, as aside from sales tax property tax is their only source of revenue, because any sort of income tax is constitutionally banned.
Well, it appears you may be right, there. As of last month, I read the consensus was Democrats wanted SALT repealed. It looks like that won’t be the case now, as the spending plan gets whittled down — now it’s looking more like a raised limit, at most.
It doesn't really change my point though – I still don't see why a $2M+ property deserves to get transferred tax free. A $2M property would still only pay a little over $10,000/year in property taxes after the $1M exemption (which you can deduct against federal taxes, even with the SALT cap, which itself will likely repealed!). A pretty nice discount for an heir compared to someone who just went through actually buying a $2M home and pays twice the tax.
Honestly, if you're inheriting up to a $5M home for free in CA, and are still reliant on a job to make ends meet, the payment probably comes out to more or less what you would pay in a mortgage+taxes for a ~$1M home. A pretty good deal! If you're inheriting anything more than a $5M home, then I don't really think Prop 13 was intended for you in the first place – people with $10, $50, $100 million+ properties, well, it's my belief that we shouldn't be basing our entire housing policy on what's best for them. They can likely afford the taxes.
Not to mention that you can only shield a house from re-assessment for 1 generation, so even if there was a multi-million dollar family home that this family simply couldn't afford to pay taxes on otherwise, the heir of the heir would have to pay taxes regardless. So what's so privileged about the situation that tax reassessment gets to skip a generation?
The law as is is designed to benefit a shrinking sliver of the CA population while debatably actively hurting the rest.
I think a decent compromise that won't actively pull the rug out from anyone while also leveling the playing field is just ending Prop 13-related inheritance exemptions altogether. It wasn't even part of the original law. Then get rid of the exemption for all commercial and secondary/investment properties going forward. Let people live in their primary homes with a frozen tax basis, sure, just don't let them transfer it (and for the edge case, to encourage downsizing after becoming "empty nesters", allow people to transfer their assessed tax basis to a property of lesser or equal market value).
Taxes for that home in TX would be equivalent to a $1.8M+ home in CA, though (and raise every year with the market), so it's not as simple as comparison. The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA.
I agree! Also the fact that TX has much more lax zoning laws (Houston has none whatsoever) than CA, and a general lack of NIMBYism compared to the Bay Area in even the cities, you get a much more affordable metro area.
Unaffordable housing prices are as much a policy choice as a function of the market.
That's a state sales tax of 6.25%. Austin and Dallas are at a minimum of 8.25%, for example. Though if you're in a specialized planning district, you can be looking at sales taxes of 10%+.
Cities have their own sales tax. And so can school districts (and they can have their own property taxes, too).
And sure, you're right, there's not much housing under $1M in the Bay Area. That doesn't change the fact that a $1M home in TX still pays about the same in property taxes as a $2M home in SF. Or the fact that in SF your property taxes are essentially frozen at purchase price, and in TX they will increase every year.
Well, considering most of those heirs who are not using it as their primary home would just end up using those homes to rent out at market rate anyways, it makes sense to tax it. If they don't want to deal with that, they can just sell it. Commercial properties over $3 million were also affected. Those moving into the inherited home as their primary residence a̶r̶e̶ ̶n̶o̶t̶ ̶a̶f̶f̶e̶c̶t̶e̶d̶ EDIT (see comment below): *will be re-assessed, but includes a generous exclusion of the first $1 million.
I'm a would-be beneficiary of Prop 13 Pre-19 and a homeowner in Los Angeles, and even I voted for this reform. I would vote to repeal Prop 13 in whole if I could. Prop 13 was originally meant to protect middle-class Californians from losing their primary home (for which other alternatives exist: see TX. Your primary home cannot be taken from you for tax reasons or in bankruptcy) – not a tax loophole for generational wealth.
Prop 13 still applies (though I personally think it inflates home prices in CA above their "true" market value and disincentivizes anyone from selling/moving).
When I bought my home this year, it got re-assessed at my purchase price, yes. But for as long as Prop 13 is the law of the land, no matter how much home prices in CA inflate, my property tax is more or less capped at the price I paid for the house.
Another thing that makes the home buying / mortgage comparison not 1-1 is Fannie Mae:
Austin/Dallas/Houston/San Antonio are not classified as "High Cost of Living" areas, as SF/LA/NYC are. This means that a conventional mortgage as of 2021 in Texas is capped at $548k, while in LA/SF it's $822k. The practical effect of that is any mortgage higher than $548k in TX is classified as a "Jumbo"/non-conventional loan, which usually comes with a higher interest rate and/or higher percent down required.
You want a $1M house in TX rather than CA? Be prepared to put $400k+ down or accept a higher rate + PMI, rather than the normal 20% down in CA. All on top of the fact that you're paying the equivalent in taxes to a $2M+ home in CA.
Property taxes are _much_ higher in Texas than California, in fact Texas has one of the highest property taxes in the nation (because there's no income tax, and TX still needs to fund itself somehow; TX also has one of the highest sales taxes for this reason, too). You pay the same on property taxes for a $400k house in Texas as a $1M house in California.
Not only that, CA has Prop 13: for better or worse, your property tax is essentially frozen in the year you buy your home in CA. In TX it increases with the market value every year. And the assessors are ruthless – market value of your home went up by 20%, as they have the past few years? Expect your tax bill to too (granted, I believe legislators have restricted this to a maximum increase of 8% a year as of this session, but I believe localities are still allowed to exceed that in some cases).
Source: I'm from Dallas, and a homeowner in Los Angeles. Though rates are publically available:
Why would any of their options be underwater? Going off of those estimates above, the pot split between shareholders after liquidation preference is 250million. Anyone who has shares is able to cash them out I imagine (how much profit dependent on how many shares someone is granted, which varies obviously but is still a positive net) — unless you’re implying the strike price is less than the share value?