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An upscale home in California. Photo: Mardis Coers/Getty Images

Californians are getting a tax break on property thanks to a state law known as Proposition 13 which caps property taxes at just 1% of the home's value, based on the year the house was purchased, reports the Los Angeles Times.

Why it matters: Proposition 13, a policy unique to California, was passed in 1978 in an effort to limit property tax increases to support residents as housing prices soared. Eight years later, the state passed an additional tax break that extends such privileges to inherited property. However, several Californians have put their homes up for rent, charging thousands of dollars per month, and covering annual property tax fees within weeks.

The big picture: A study by the Times shows that property owners largely aren't living in them. 63% of those who inherited such properties in Los Angeles county alone rented the homes out last year.

  • Actors Jeff and Beau Bridges, along with their sister, own a four-bedroom home in Malibu they rent out for nearly $16,000 a month with an annual property tax bill of less than half that.
  • Actor Peter DeLuise inherited a three-story home from his father where he charges $24,000 per month in rent. A single month covers his property tax bill in three weeks, the Times reports.

The other side: "The tax break has deprived school districts, cities and counties of billions of dollars in revenue," writes the Times.

  • A report from the state's non-partisan Legislative Analyst Office estimates the state has been skimped on about $1.5 billion in revenue, totaling 2.5% of the state's property tax value.

Be smart: Despite significant losses for the state and benefits for property-owning Californians, Proposition 13 won't go away anytime soon. Nearly two-thirds of the state still supports the initiative.

Editor's note: This story has been corrected to reflect the appropriate California laws.

Go deeper

Ben Geman, author of Generate
8 hours ago - Energy & Environment

Key clean power provision likely won't survive in Dems' spending bill

A construction worker walks along a dirt road at the Avangrid Renewables La Joya wind farm in Encino, New Mexico, on Aug. 5, 2020. Photo: Cate Dingley/Bloomberg via Getty Images

A pillar of Democrats' plans to speed deployment of zero-carbon electricity is likely to be cut from major spending and tax legislation they are struggling to move on a party-line vote, per multiple reports and a Capitol Hill aide.

Driving the news: The New York Times, citing anonymous congressional aides and lobbyists, reports that West Virginia Sen. Joe Manchin (D) has told the White House he "strongly opposes" the Clean Electricity Performance Program.

Updated 10 hours ago - World

Fatal stabbing of British MP David Amess declared a terrorist incident

Police outside Belfairs Methodist Church in Leigh-on-Sea, England, on Oct. 15. Photo: John Keeble/Getty Images

Authorities have declared the death of David Amess a terrorist incident, hours after the Conservative Party lawmaker in the U.K. was fatally stabbed while meeting with local constituents in a church in eastern England on Friday.

The big picture: The Metropolitan Police has found "a potential motivation linked to Islamist extremism."

Biden: DOJ should prosecute those who defy Jan. 6 subpoenas

President Biden speaks with reporters at Bradley International Airport in Windsor Locks, Connecticut. Photo: Brendan Smialowski/AFP via Getty Images

President Biden said Friday that the Justice Department should prosecute those who defy subpoenas from the Jan. 6 select committee.

Why it matters: The president's remarks come one day after Donald Trump ally Steve Bannon failed to show up for a deposition before the committee.