Property taxes

I live in CA, which has capped the nominal increases in property taxes (with some exceptions that don't presently apply to me) at 2% per year.
ES Planner is escalating my property taxes each year, despite the fact that my taxes are capped at a 2% increase, even when inflation is higher, such as the 3% default rate. The real dollars amount for me should go down 1% per year.
Is there a way to adjust the increase? Using a special receipts entry might work, but would leave the housing expenses wrong.


dan royer's picture

Well, one way is to use the "annual real appreciation rate" of the value of the home in the Primary Housing area. If you set this to 0%, your taxes and insurance will remain the same. If you set it to -1% you'll see it go down 1% each year in today's dollars (that is relative to your inflation rate).

Dan, I tried your suggestion. I set inflation in the assumptions tab to zero & the Annual Real Appreciation Rate to -2%. All the housing data - insurance, property taxes, home equity - showed a -2% decrease each year except the "Maint & Condo fees" which did not change. Shouldn't "Maint & Condo fees" also be changing?

dan royer's picture

No, Maint is assumed to track with inflation so it will stay the same all the way down, irrespective of your appreciation rate on the home.

Since the house value is going up (presumably) faster than the rate resulting from entering the -1% growth, my estate assets are way off.
Also the other expenses should not be limited by the property tax limitation.
It seems like the best solution is to ignore the matter and realize that property taxes are overstated. At least this is more conservative from a planning standpoint.

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