Property Tax | Palo Alto BNB

Here’s a Palo Alto near-specific problem.

Please see the appropriate professionally certified advisor before making decisions based on what you find in the article’s content.

AND See legal Disclaimer at bottom.

Ok, let’s get on with the article…

Everyone complains about the prices in Silicon Valley, but Palo Alto takes the cake.

In a recent news article, the Palo Alto Zip Code 94301 is the record holder for highest average priced real estate in the nation, which generally translates to, expensive to own real estate, not just expensive to buy.

PROPERTY TAXES

California’s property tax which amount to about 1.1% of your market value. That is, unless you fall under Prop 13/58 protections. There are usually other additional costs attached to your property tax, like county services or other smaller taxes, but 1.1% is the California State chunk the would be often more than most people’s salaries. Let’s call the full market value times 1.1% “RULE #1”.

So you City Planners, before you let a company like Google or Facebook start a big office in your little town, make sure your residents will likely be hammered with ever increasing home property values and therefore RULE #1. (unless you are in a State that does not tax property).

It may be possible you might qualify to be waived from the market rate-based property taxes on inherited property. That’s assuming the aggregate base factor for your parents property tax is under 1M.

SOME RELIEF IF YOU

QUALIFY AND APPLY

BASE FACTOR IS, for those of you who do not know, the value the property tax is based on when your parent died, NOT the market value. Please consult with a Tax Advisor, but you need to APPLY for the Prop 58 Exemption (for investment properties). IF YOU DO NOT APPLY you will suffer the consequences and your children will hate you for life for being such a ignorant poofball. Be alert, this application is time dependent after the death of your parent.

There’s good news: if the house was your parent’s primary residence, you have a 100% exemption to reassessment to market, unless you have to buy portions of it from your siblings then RULE #1 applies. Once again, please consult with a Tax Advisor who is educated in estate law and property tax laws if there is a chance you can avoid RULE #1.

And as you know, finding a single property under $1M in this area is virtually impossible in Palo Alto (unless you’re talking about EAST Palo Alto). However, if your aggregate investment properties’ BASE FACTOR all amount to less than $1M, you will have a complete Prop 58 exemption (please see disclaimer at bottom of article). If the aggregate Base Value exceeds $1M, then you will need to select which $1M of value will receive the exemption. The others will be reassessed at current market value.

The other good news is, if you have to speak to the Santa Clara County Tax Assessor’s Office, you will find some professional and helpful clerks to make sure you are pointed to the right info related to some tax exemption possibilities. Please seek their guidance and CHECK IF THESE RULES APPLY TO YOU.

My little RULE #1 RANT

The sad fact is, in order for a lot of residents of this area to survive, they need to rent out a room or a “granny unit” to someone to have the extra income to pay for the drudgery of RULE #1. Keep in mind what I said, many rent out just to pay the property tax, not to have extra money to send the kids to college or pay for a vacation – just to pay the damned tax.

SO the injustice is, the only people who can afford to pay the higher taxes are even more wealthy people while the less wealthy people get screwed because all of a sudden their taxes are unreal. SO…., just some dynamics to think about in regards to taxing people to kingdom come linked to their private property or even their primary residence values… values that they have little or no control over. Sounds like slick way to rip off private property.

So which State doesn’t charge property tax?

So what does this have to do with a BNB?

Some link VALUE to NIGHTLY RATES

While it is true that there is supply and demand for accommodation services, and that raises the average price of lodging in Palo Alto and the surrounding areas, the tax responsibility is probably not on the radar of the average guest who decides to report to the world that, “there wasn’t enough value for the price at your place” (when in actuality it’s the whole expensive area, not just your place). Well…. one 4 out of 5 rating isn’t bad, but maybe we’re getting too technical.

I remember the first time we received a “4” for “Value” instead of a “5” from one of our great guests (I’m not being sarcastic, he was an excellent guest), and I actually messaged him privately wondering what his rational was. He was nice enough to give us his point of view citing the area is expensive. Yeh, so even though we should not take it personally, it shows up on the review of our place, not Palo Alto, the City with the most expensive real estate and therefore some of the highest taxes in the United States.

OK, i’m cool now. I promise not to explode.

BTW, I don’t ask guests ever again since the first guy, why they decide on “4” instead of a “5” (LOL).

In actuality, I take a survey of area listings and have to determine what I believe is a “fair” price for what we have to offer. We’re doing alright so far.

Please like, share, comment, follow my blog or contact me if you have any questions

CKY

Legal Disclaimer: please note, I am not a tax advisor, or claim to have an certification to offer legal advice in the matters mentioned in this article or any post in my blogs, websites or other social media. You MUST consult with the appropriate certified legal representative to determine the facts of any matter related to or mentioned in this article or any article under my domains that may have any legal consequences before making any decisions.