always controversy around it,

but many people don't know how it actually protects them.

And let me just say that it protects more than just homeowners.

If you are a renter, this does apply to you.

So be sure to watch at the end when I talk about prop 13 and renters.

So if you are a renter or homeowner,

you need to watch this video.

[inaudible]

who am I? Who am I to be talking about?

Prop 13 I'm a homeowner and I pay taxes and boy am I glad that prop 13 passed

decades ago.

I'm also a real estate agent and I need to be able to advise my clients what

people are going to pay as far as taxes when they're looking at houses.

If you live in the Hayward area or surrounding communities,

please be sure to subscribe to my channel as I love bringing my friends and

neighbors information about homeownership and the Hayward area.

So let's tackle the history of prop 13 first.

Prop 13 was passed in 1978 and it has been protecting your outrageous property

taxes ever since then.

It was a response to the out of control property taxes that they were having at

the time.

Homeowners were seeing their homeowner's taxes skyrocket as much as doubling

every year.

And in so many cases it was unpredictable and they didn't know how much they

were going to pay and in some cases also on affordable.

So a retired businessman named Howard Jarvis,

he got to work on this ballot and he got his fellow homeowners and thankfully

they got it to pass in 1978 so why was this so important to us?

Well, today our interest rates are hovering around 5% to buy a home.

In the late seventies they were anywhere from 10 to 13% add that fact in that

your taxes could as much as double every year.

Homeownership became unaffordable for some and made some.

So when they didn't want to,

let's say that the real estate market was doing very well in your neighborhood,

values are going up. Yay. Well,

so on your property taxes, boom.

Just as a market peak could be unpredictable. Taxes were also,

so imagine getting a bill for $600 one year for your property taxes and $1,200

the next year in the 1970s that could totally break you.

So let's make those with today's numbers.

You get the bill for $5,000 one year and $10,000 the next,

that would be outrageous.

So how does prop 13 actually work? Now that we have it,

it limits the tax rate on all California property to 1% of value,

whether it is residential, commercial, or industrial. For homes,

it's usually based upon the purchase price.

Prior to prop 13 the tax rate was as high as 4% in some counties with the

ability to double or beyond predictable.

So once the initial tax year basis set,

counting assessors can only increase your taxable value by no more than 2% a

year. Let me give you an example with round numbers. Okay.

Let's say you purchase a home for $500,000 that's going to be your tax base.

So you would owe approximately $5,000 the first year or 1% of the purchase

price. Now remember,

each county also has special assessments,

other taxes and repayment of bonds built in.

So 1% is usually your start and then there's a little bit more on top of it.

There can also be Mello Roos or other costs passed on by the builders that are

tacked on. And you need to know about these things before you buy a home.

So in my city of Hayward, California,

I usually tell people to budget in between 1.25% to 1.50% going back to our

example the next year,

the home with me be worth $510,000 and then with that 2% more,

the current year taxes would be $5,100 in year two $100 well let me just say

only $100 more than the year previous.

Not the devil like it could have been before prop 13 so you may think as a

renter you are exempt,

but not so you are directly affected. Do you pay rent?

Yes.

And your rent goes toward your landlord's mortgage as well as home insurance and

property taxes.

If his or her property taxes were to double because we didn't have prop 13 then

I'm guessing your rent would also,

so be sure to think about that. If prop 13 ever goes to the ballot again,

it seems as if every election year somebody brings up the prop 13 issue,

usually a politician, and they get it in their mind to take it away,

to get more money towards taxes. Be sure to tune into my next video,

which is about changing prop 13 if you haven't yet,

please be sure to hit that subscribe button and the light button.

It means a lot to me. If you liked this video,

you might like this video or this video and be sure to subscribe to my channel

here. See,

ya on the next one.