Last week I asked all of you should states cap property taxes like Georgia based on inflation? The real estate pros have spoken and as you can see from the chart above, the majority (76%) think that states should cap taxes based on inflation while 24% were against this proposal. The comments were insightful as to why or why not.
What did real estate pros say about capping property taxes?
76% supporting a tax on property taxes is about where I thought the number would fall, but the reasoning for and against was very insightful. Here are the top comments:
- Property taxes have grown way faster than is needed for local governments; why should government spending increase 60% over 5 years in GA based on appreciation of houses
- This idea creates another golden handcuff much like artificially low interest rates. I think it could also have the unintended consequences of a kind of de facto redlining as some neighborhood areas may transfer much less frequently leading to lower collected rates for those communities’ schools and infrastructure. I am very anti-tax, but this seems less good than cutting spending.
- The intent is good (to keep people in their homes) but it always gets botched in execution. CA prop 13 would have worked if it remained residential in scope and hadn’t been extended to large corporations at the last minute in its passage. It’s a really hard policy to craft without thing getting corrupted- especially in the current culture of graft.
- The govt should have budget restrictions and an inflation based cap or similar index will help property owners afford their homes as many(more than half?) incomes do not keep up with the property tax increases.
Capping property taxes not clear cut
Thank you everyone for your participation and insights in my survey. The insight in the comments from readers was amazing and I hope everyone gained a good perspective from your fellow readers. My key takeaway is that like everything else, there are unintended consequences on both sides. Letting property taxes continue to rise far faster than inflation is not a great answer and neither is capping property taxes. Unfortunately the best answer is to cut spending so we don’t even have this discussion but in today’s environment most politicians only know how to tax and spend. Thanks again for your insights and stay tuned for upcoming surveys
Additional Reading/Resources:
- https://www.fairviewlending.com/americans-staged-a-property-tax-revolt-ga-led-the-way/
- https://www.fairviewlending.com/fed-drops-rates-why-did-mortgage-rates-barely-budge/
- https://www.fairviewlending.com/phantom-debt-soars-what-does-this-mean-for-real-estate-2/
- https://www.fairviewlending.com/never-buy-a-residential-condo/
- https://www.fairviewlending.com/the-war-on-landlords/
- https://www.fairviewlending.com/house-prices-hit-another-record-should-you-even-care/
- https://www.fairviewlending.com/root-cause-of-real-estate-price-declines/
- https://www.fairviewlending.com/will-real-estate-fall-to-2020-values/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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