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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

President Joe Biden vows to be "a president for all Americans"

Moments after taking the oath of office, President Joe Biden sought to soothe a nation riven by political divisions and a global pandemic, while warning that "we have far to go" to heal the country and defeat a "virus that silently stalks the the country."

Why it matters: From the same steps that a pro-Trump mob launched an assault on Congress two weeks earlier, the new president paid deference to the endurance of American political institutions.

Updated 36 mins ago - Politics & Policy

Inauguration Day dashboard

U.S. Capitol and stage are lit at sunrise ahead of the inauguration of Joe Biden. Photo: Patrick Semansky - Pool/Getty Images

President Biden has delivered his inaugural address at the Capitol, calling for an end to the politics as total war but warning that "we have far to go" to heal the country.

What's next: Biden and Vice President Harris review readiness of military troops, a long-standing tradition to signify the peaceful transfer of power.

Updated 59 mins ago - Politics & Policy

In photos: The Biden and Harris inauguration

Joe Biden is sworn in as the 46th president of the United States. Photo: Alex Wong/Getty Images

Joe Biden and Kamala Harris were inaugurated as president and vice president respectively in a ceremony at the U.S. Capitol on Wednesday morning.

Why it matters: Top Democrats and Republicans gathered for the peaceful transfer of power only two weeks after an unprecedented siege on the building by Trump supporters to disrupt certification of Biden's victory. Trump did not attend Wednesday's ceremony.