No, its pushing her into a cash flow problem. Its not poverty; she has substantial wealth, but its all in the house.
There are mechanisms, of course, to access that wealth without moving, including ones specifically geared toward income-limited house-rich retirees.
Now, those end up creating a debt that must be resolved before transferring the house, including via estate, so living on the value of the home reduces its utility as a vehicle for generational wealth, but...unless you want to reproduce California’s system which makes it much harder for people to become homeowners while rewarding those who already have, eapecially the wealthiest, making the rich richer and what would be the comfirtable middle class anywhere else in the country poor, that’s the way it works (and your exact scenario was the major sales pitch that was used to sell the California system; its maybe understadable how people without 50 years of California’s example fell for it then, but...)
It exempts you from "excess levies" (basically levies that are voted on) and some statewide levies and freezes your taxable assessed value. If your disposable income is low enough it also starts excluding part of your assessed value from taxation.
Why are we trying to take houses away from homeowners? Many who have lived in their homes for twenty years or more. What services that the city has could be so important to push residents out of the homes they've lived in all their lives? Most of it is inefficient pork on admin and roles the people living there didn't choose to hire for.
Build more. Encourage building multifamily. Pay to buy these homeowners out of their single family and convert the land to multifamily. If you can't pay, don't try to make it up with tax increases. That forces people out.
Deregulate and build.
Maybe a city failing to stretch services will send new residents seeking other cities, which would be healthier anyway.
In my city and others our city council delivers large grants to non-profits and other entities under various auspices. “Defending gay rights” is one, or maybe helping the homeless or something. Of course I support both causes in general, but if the city gives a million dollars away maybe we just have to have some people kicked out of their homes to pay for these programs?
You can say well we will just raise taxes on the wealthy. Sure yea, whatever but that isn’t a viable long term strategy for places outside of California or New York which have an ability to capture wealth better due to intrisinic location value. There are only so many “rich” people. Could I afford another $10,000 in city taxes? Yea. I won’t be able to go out to eat or shop at local business as much though. So then what happens? Do those businesses go under? Raise prices? What about their property tax? Maybe instead I sell and take a loss on the house and the market value goes down so now that home pays less in taxes (depending on how this stuff is measured in a given jurisdiction).
> Maybe a city failing to stretch services will send new residents seeking other cities, which would be healthier anyway.
Yea. Tell Google and Meta and whoever to stop putting more jobs in the “cool” cities and come to Ohio where I live instead of these data centers.
This stuff is rather complicated, unfortunately. Even the case of a city let’s say “building affordable housing” is arguably a benefit to the local homeowners, but if you do that yea sorry Granny McPension has to pay for it too - she has a house, she’s wealthy!
Probably less.
And probably irrelevant to the people that already live there.
So probably the taxes should be lowered then and then grandma doesn’t need to be kicked out. Everyone wins
But that's what the market is already doing? In your example from above, you can take a $400,000 windfall and move somewhere else, or take out a mortgage against that $400,000 of new equity to pay your taxes and still come out waaaaay ahead. I don't understand your characterization of a second mortgage as "taking the house away" at all.
If it's not, then I would also like to live in a nice neighborhood for $100k and zero property tax, please.
On the other hand, if it is, then this person has a substantial economic asset that she could reverse mortgage, rent out, or sell.
Especially not when you're getting older, have limited ability to manage a move for yourself, built a life and raised your kids in the building, and would have to consider unloading a lifetime's worth of objects and/or moving infeasibly far away from your friends and community to get into a living situation that's more financially tenable.
> Especially not when you're getting older
Houses are wealth. And the wealth in them can be accessed while retaining use of the house. Especially when you are getting older.
Why are we replaying the dishonest “think of the retirees” now? It was bullshit in California in 1978 to sell Prop 13, and its even bigger (and more transparent) bullshit now when, especially when it is used to sell the same basic idea.
And where would she move to? All decent areas probably also increased in price, her property went up 10x in value but so did all other properties she would contemplate to buy. That’s the fallacy of thinking property is wealth when talking about your only residence.
What a morally bankrupt viewpoint.
Claiming that the retiree has a right to both the home value and the ability to live there is the friction point. It reads as hollow in the face of rising homelessness and the inability for young people and families to access housing.
I think if we had a totally different culture, with multigenerational families living in the same house, then this might work better. But this model where we build new family friendly neighborhoods with parks and schools, and then nearly everyone ages in place and all the family amenities become empty over time, and the families all end up in the next new neighborhood and then it repeats, this doesn't seem ideal to me.
It's OK that they don't last forever; they're schools, not irreplaceable shrines.
And speaking of things that also don't last forever: Homeowners. Grandma Sally isn't going to live forever. The house winds up on the open market in order to seek satisfaction of Grandma's debts, and then some new family buys it at market price and is free to breed a whole new fleet of kids to raise there.
There's still eventually churn in the marketplace, and in the neighborhood. The churn didn't disappear just because Grandma Sally was able to choose to keep living in the same place until she died quietly of an agonizingly painful heart attack as she stood in the kitchen making tomato sauce after church on a Sunday morning before the family dinner that afternoon.
People die all the time. It's often tragic, but it's natural and ultimately unavoidable.
People also get forced out their forever-homes all the time, too. That's also often tragic, but it happens for artificial reasons that could be avoided if we bothered with trying to do so.
That seems a bit ironic?
> Grandma Sally isn't going to live forever. The house winds up on the open market in order to seek satisfaction of Grandma's debts
Not always, grandma can pass the home down to whoever. IIRC there are ways to do it without triggering a reevaluation on the original purchase price.
Anyway, Grandma is as dead as that Sunday dinner. She won't care that the new occupants are being complete heathens about smoking dope and makin' babies on the sofa.
> Houses are wealth. And the wealth in them can be accessed while retaining use of the house. Especially when you are getting older.
Simple example. I bought the house at $100k. It's now worth $500k. That means I owe $20k/yr in taxes, but it also means I have $400k of additional wealth. A bank will lend me money with that wealth as collateral. If you imagine that the interest on the loan is roughly equivalent to the rate of appreciation of the property going forward, that's 20 years of taxes paid for by the increase in home value. Seems like a pretty good deal for everyone!
"And where would she move to?" -- Either the graveyard or the incinerator? She's dead... the bill doesn't come due until after her death and is settled from the value of the house.
I don’t want my country to force old people to either move from their home, or take out risky debt.
There are absolutely problems and prop 13 has been awful for California but it’s a red herring to worry about the primary residence exceptions.
Perhaps the retired person is living on a fixed income of $40k/year. Over time their proterty taxes on the home that they have lived in for decades can now be more than half of their total income? How is this fair at any level?
> How is this fair at any level?
How is it fair that working people have to pay 10x for housing than she did when she was young? How is it fair that the money goes to her inheritance while she made her working neighbors pay her share of taxes?
Where I live, we are looking at locking property taxes once you hit a specified age (65) and have under a specified income ($40k+/-). The current debates revolve around exactly what those numbers are and at what level the taxes get locked. The goal is to protect the elderly who have already contributed to the economy and society for 40+ years and not force them into a financial situation forcing them to sell their home just to pay even more property taxes that they have paid for the entire ownership.
Oregon has a deferral where the delayed property tax comes from the value of the house when it is sold or I guess when you die. https://grantsforseniors.org/property-tax-relief-for-seniors....
Washington has a similar thing.
"All Washington counties offer senior citizens and disabled households property tax exemptions. Eligibility is based on your age or disability status, home ownership, residency in Washington, and income level. Seniors who are at least age 61, or retired from regular gainful employment by reason of a disability, with an income of $64,000 or less are eligible."
The idea is to help people stay in their houses. This is really really important. And if you can afford it, you should be paying property taxes. I'm lucky I can afford mine, but I highly support this strategy.
In my state I occasionally see people in online discussions saying they can't afford their property taxes - I think a lot of people aren't aware of these programs, people are amazed when I post a few pointers and tell them about it.
Quite the opposite.
Telling people that the solution is to sell their home to an insurance company as a solution is most certainly a corporate land grab.
You seem to be arguing about people/corporations that own multiple homes or even entire portfolios of property. These are not the same argument.
If their asset is gaining in price so much that the tax burden is getting high, then tax deferement until a liquidity event both keeps them in their home, but also keeps them honest about how much they are taking away from the rest of society by taking that piece of land.
The premise does not warrant this conclusion.
People’s primary residences are more than just an economic asset. If you don’t understand that, it’s difficult to have a conversation as we have very different starting points about morality.
I also don’t buy 20K of property tax on a 500K home, that’s a 4% tax which seems unlikely in Chicago.
Something isn’t right. Poor financial planning maybe?