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In California, you can now sell your ADU

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Re: In California, you can now sell your ADU

#71

Post by hnav »

TheBlight wrote: post #40
bugglebeetle wrote: post #22

I’ve resigned myself to the fact that California has signed a suicide pact with real estate speculators that can’t be revoked because of the political consequences of enacting policies that cause prices to go down or even stabilize. Like with the homeless crisis (which is the direct result of the housing crisis), the state will waste billions doing anything and everything to look like they’re working on the problem,…

>which is the direct result of the housing crisis The homeless crisis is better described as a mental health and substance abuse and addiction crisis.

It's both. The homeless that are most visible in large cities definitely have some of the above going on, but a good chunk of the population is living in a car just because they got priced out.

Re: In California, you can now sell your ADU

#72

Post by yonran »

brvsft wrote: post #21

ADUs seem like a bandaid solution for lack of housing supply in desirable areas. Not that I think they shouldn't be legal, but we're talking about paying hundreds of thousands of dollars for what amounts to a shed in someone else's backyard just because you want to live in Seattle, SF, etc. It's so bizarre, and if this solution is taken to its logical end, you literally have cities full of single-family homes with a…

> and their second-class ADU "owners" who live in the fancy shed behind their home

The primary home is not upper class; it’s the worse of the two units. It just becomes two houses without backyards. I’ve seen such houses for sale in Seattle. An old house with a big yard on a 5000 sqft lot turns into an old house + a new house, both without backyard. The new unit is not second-class; it is a nice house but just without backyard.

Re: In California, you can now sell your ADU

#73

Post by yonran »

onlyrealcuzzo wrote: post #67
yonran wrote: post #55

Earlier quoted context omitted.

I wish reporters highlighted the stepped up basis tax loophole that causes the bizarre behavior, rather than claiming that grandmothers just can’t “afford” to sell. Many grandmothers would “afford” to sell their house if there were no tax benefit to holding it until death. Same with the “Buy, borrow, die” behavior that ProPublica reported on ( https://www.propublica.org/article/the-secret-irs-files-trov... ). Instead…

What is the tax benefit of stepped-up basis over 1031-ing into RE rental properties and a cheaper primary residence? In California - obviously prop 13 if someone in the family plans to keep the house.

1031 exchange by itself only defers taxes (which can be helpful for cash flow purposes). People combine it with the stepped up basis loophole to avoid taxes completely.

As for Proposition 13/58 inheritance, note that Proposition 19 (2020) restricted the inheritance benefit to only family homes and farms, so I don’t think inheritance is a widespread benefit anymore. Proposition 19 also made the property tax basis portable, so the increasing property tax is no longer an impediment to grandma moving.

Re: In California, you can now sell your ADU

#74

Post by hnav »

yonran wrote: post #36
gjsman-1000 wrote: post #10

"the bill requires cities to opt into the program." How many cities will ever sign up for this?

Yeah, it’s unlikely that San Francisco’s current majority at the Board of Supervisors would opt in to this program. Both because they are hostile to housing in general and because they have a special aversion to condominiums (which they likely conflate with an unrelated displacement issue when existing apartments are converted to condos and the tenants are evicted). To be fair, however, they did pass an ordinance tha…

Rent control (and to a lesser degree below market rate units) itself seems to be a huge problem that's impossible to unwind, since all it does is arbitrarily grant exemptions to the rising cost of housing while exacerbating the overall problem. There are plenty of affluent people who have a have a rent controlled pied a terre in SF that they've had for 20 years while spending most of their time in their house in Sonoma.

Re: In California, you can now sell your ADU

#75

Post by sokoloff »

onlyrealcuzzo wrote: post #67
yonran wrote: post #55

Earlier quoted context omitted.

I wish reporters highlighted the stepped up basis tax loophole that causes the bizarre behavior, rather than claiming that grandmothers just can’t “afford” to sell. Many grandmothers would “afford” to sell their house if there were no tax benefit to holding it until death. Same with the “Buy, borrow, die” behavior that ProPublica reported on ( https://www.propublica.org/article/the-secret-irs-files-trov... ). Instead…

What is the tax benefit of stepped-up basis over 1031-ing into RE rental properties and a cheaper primary residence? In California - obviously prop 13 if someone in the family plans to keep the house.

(AIUI,) You can't 1031 exchange an owner-occupied property into a rental property. (1031 is a "like kind" exchange treatment and you can't take personal-use property and directly 1031 into business-use property.)

Re: In California, you can now sell your ADU

#76

Post by Izikiel43 »

epistasis wrote: post #68
Izikiel43 wrote: post #62

The problem with San Francisco, Seattle, and Vancouver (BC), and other cities with housing issues is simple, Americans seem to hate apartments, everyone wants houses, so most of the cities are zoned for SFH (Seattle and Vancouver for sure). If you built 10 floor buildings everywhere, with 2/3 bedroom apartments, even at 1 apartment per floor, housing stops being an issue in 5 years. However, go to Seattle, San Franci…

Polling shows that there's only a slight preference for single family homes. Yet the land usage is absolutely dominated by bans on apartments. If preferences really were so strong for single family homes, there wouldn't have to be a legal ban on other forms of housing. This stranglehold on the housing problem, by a few politicians and a small number of homeowners banning others from living their preferred way of life…

> Polling shows that there's only a slight preference for single family homes.

So, 51% vs 49% ? That's still half of the people wanting houses.

I agree that regulations are to blame, and most of the voters vote against housing, because people in the us who vote are mostly the boomers, who are mostly homeowners, hence increasing the value on their home.

Re: In California, you can now sell your ADU

#77

Post by Dig1t »

onlyrealcuzzo wrote: post #6

> The legislation could be a major benefit to senior citizens on a fixed income who often can’t afford to move, whether because of high interest rates or capital gains taxes incurred by selling a long-time home. A group that is extremely small - and we pretend like every grandma in the world lived in a little cottage in Hollywood that's now worth $3m - and whatever would she do if she had to 1031 into rental properti…

>1031 into rental properties and live lavishly literally anywhere else in the world.

That is an optimistic spin on a situation that can play out in several ways. What you describe is the best possible outcome. Another, pessimistic, way of phrasing that is that you're kicking out grandma because she is too poor to pay the taxes. Nevermind if it's the place where she raised a family, built a house, and had an entire life's worth of memories. She should be forced to move somewhere else to make room for Hollywood producer man and his mistress?

The economic incentive to build housing and lower prices already exists. I can buy a piece of land that has 1 house on it, bulldoze the house, and then build a multi-unit condo on it (easily quadrupling the number of people who can live on that piece of land). I will make a ton of money doing that because 3 extra families can live there and all pay me for the housing. If you let this take on a city-wide basis, prices will come down. However that incentive has been effectively killed because the city has something called "zoning". Which means the city mandates exactly what is allowed to be built on each parcel of land, in excruciating detail. If you don't believe me just google "FAVORITE-CITY zoning ordinance". The vast majority of housing in cities and towns in the US is zoned as "single family" which means that even if you own a piece of land and want to build more housing, the city will not allow you. To change this you have to go to the city zoning board and ask them to change the zoning for your land. Guess who the people on that zoning board are? People who own single family homes in the city. They do NOT want to see the character of their neighborhood change, they will deny your request in a heartbeat.

So we're prioritizing the "character" of our neighborhoods instead of the people who actually live in them? That seems completely backward.

Source: I have physically tried to build housing and been stopped by the city zoning board.

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