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Proposition 13 and its affect on California foreclosures is a subject worth spending a few minutes pondering, especially as California undergoes its struggle to deal with the rate of its foreclosures and also because California has such an out sized affect on the rest of the country eventually whenever something goes on there. Prop 13 is the famous anti-tax initiative passed in 1978, by the way.

Officially, Prop 13 is called “The People’s Initiative to Limit Property Taxation.” It’s an amendment to the Constitution of California that caps taxes on property and real estate at a predetermined level. These property tax rates were held to 1% of value, which in some cases led to a reduction in tax rates of up to 60%.

At its heart, Prop 13 was a push back by the state’s voters over anger about how property taxes were being continually increased by state and local municipalities on an almost annual basis in order to strengthen tax revenues. Anyone buying a home prior to 1978 could expect to look at a stiff tax bill at the close of the sale as well as predictably large tax increases every year thereafter.

There are always actions and reactions to anything, and an action that may have been unanticipated was that legislatures in the Golden State were effectively prevented from raising any sort of revenue on home sales other than what was laid out in the initiative. The dispute over that went all the way to the Supreme Court, which held in 1992 that it was legal. Prop 13 usually affects the state and its municipalities after foreclosure, for the most part.

That’s because much of California in terms of government depends on a steady stream of revenues coming from various taxes and tax rates. While the market was strong, little trouble ensued because sales volume brought in a lot of tax revenue anyway. But nobody in the state at any level seemed to be banking any of that money for a rainy day.

Most economic experts think that the rainy day in California — in terms of home sales — finally arrived at some point in 2006, and the rate of CA foreclosures seems to be evidence of that fact. There are small signs of rate stabilization but home prices have been in decline for a while. With homes worth less, the state is taking in less revenue from sales taxes on those homes.

Conservative estimates by supporters of the proposition maintain that it has saved taxpayers over $528 billion from its inception until mid-2009. Those who argue for repeal continue to state that Proposition 13 has had a direct effect to the budget problems have only been exacerbated by the bust in real estate which California is currently experiencing.

At present, it appears as if the rate of CA foreclosures might have stabilized. This may lessen discussion of what to do about Proposition 13, if anything is to be done about it at all. Nobody in the state seems to have much desire to address the issue, certainly at the legislative level where the focus looks to be on imposing budget discipline and maybe even serious spending cuts above all else.

The effect of Proposition 13 on the rate of CA foreclosures is a worthy activity to research, considering how much affect California has on the rest of the country, especially when it comes to initiatives like Prop 13. We’ve got the ultimate inside scoop now on ca foreclosure properties.

categories: California foreclosure,California property,California real estate,California real property,foreclosure,real property,real estate,loans,legal,make money,investing,personal finance,finance

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