A friend was telling how his boss said he'd give him a company truck as a
going away present when he leaves his job. But, a boss can't just give
gifts like that, the tax people won't allow that to happen.

So what the boss did instead was give this man a $3500
bonus, and then told the man he had to pay back the $3500 for the truck.
The unfortunate problem is that this bonus had $1400 in taxes subtracted
from it. So for this man to pay $3500 for the truck, he has to take $1400
out of his regular pay, which leaves him and his family about $200 to live
on for the month. This guy is just a handyman, not a rich man at all, and
yet he watches a third of his bonus disappear. And it doesn't include the
additional 8% sales tax he'll pay the department of motor vehicles for the
gift, or the registration transfer fees, or the time he'll waste applying
for the transfer. Those add another few hundred dollars in cost for this
"free" truck.

With many of the starter properties in this area coming close to
$1,000,000, the property tax bite of 1.5% per year is significant. Just 10
years ago, it was possible to rent a house in this area for $1500 or so a
month. Now, a free and clear paid for house would cost almost that much in
monthly taxes! And if not paid for, the monthly house payment could be an
additional $4000 or more a month. A friend of mine says that in San Jose
even nasty looking fixer-upper houses are close to a $1,000,000, and
looked to him like they would need $100,000 in work just to make them
liveable.

Think About This, Will Property Taxes Kill The Rental Investment Market?... It's one thing to buy an investment property that can rent for $2000, and have a $4000 a month payment if 100% of the value was financed. If you had 50% of the value of the property to put as a downpayment, that would cut the monthly payment in half, and it still might make sense to buy the rental property. But what if the tax bill now nearly equals the amount of the rent that can be collected? Landlords are the property owners, and they are the ones who pay the property taxes. But what if 50% or more of the rent is eaten up in property taxes? The only possible response is that landlords will need to raise the rent to compensate. Who will get the squeeze then? It will be renters, who get no deductions, of course!

And even if you buy a property, there are often lots of regulations that
stop you from developing the property unless you can afford to pay tens of
thousands of dollars in "permit" fees to request permission to make
changes. And even if you pay the fees, they can still say no, and then
there is nothing you can do, except pay a bunch more money to an attorney
to try to get them to change their mind.

A friend of mine is going through
this with a large farm that he would like to redevelop into a small
development of 6 houses. He's spent over $100,000 just to be turned down.
He needs the income from redevelopment to pay his debts because of his
divorce, and he could lose the farm, or have to sell at a significant loss
(millions of dollars) compared to what it would be worth if he were
allowed to do the development. So unless he can find even more money to
hire attorneys to battle this, he is out of luck. So much for being able
to control one's own private property in this country.

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