Proposition 13 Saves SF Property Tax Payers $447 Million in 2015
According to a study by economist Ralph McLaughlin, in 2015 San Francisco residents who pay property taxes would have owed a whopping $447 million more if not for the impact of Proposition 13, passed in 1978. Prop 13 means big savings for California homeowners to the tune of $12.5 billion saved statewide last year. This means, of course, on the other hand that the city didn’t get that $447 million for its revenue coffers. Prop 13 establishes a 1 percent cap of property taxes and a 2 percent cap on home appreciation.
The result of these two caps on property taxes and home appreciation is that affluent coastal cities like San Francisco save the most. This is a perfect storm of higher home appreciation and the homeowners tending to live in their homes for longer periods of times—accruing the most savings. Los Angeles and San Diego came in ahead of San Francisco in terms of savings in 2015. McLaughlin concludes as well that with current property values in SF the effective tax rate is only .6 percent—among the lowest in the state.
“Price appreciation and resident tenure go hand in hand,” McLaughlin explains in the report. “The more prices appreciate in a community, the lower effective property tax rates become, which in turn, provided incentives for existing homeowners to stay put. Cities with more new housing growth, on the other hand, will likely have higher effective tax rates because of a larger share of new residents and thus more properties recently assessed at current market value.”