How Will The Property Tax Fairness Initiative Affect California Homeowners?
When November rolls around, California will vote on The Property Tax Fairness Initiative, a ballot proposition sponsored by the California Association of Realtors, and many homeowners are asking how the results of the vote could impact the luxury real estate market. Most likely, there will be “no direct impact”, lawyer Daniel Leer told Mansion Global. However, it could affect the mobility of baby boomers and retirees.
According to Leer, the motive of the proposition is to amend the state’s Proposition 13, which passed in 1978 and capped property tax increases at 1 percent, only allowing properties to be reassessed when they switched owners. Even in expensive neighborhoods such as Palo Alto and Saratoga, where real estate costs continue to skyrocket, those who have owned their homes for years are still paying property taxes based on the home’s original price. This means homeowners who want to continue paying the same tax rate are locked into their current homes.
California does allow residents older than 55 to transfer a low “locked-in” tax rate one time from one home to another, but they must move within the county, and the new home must be of equal or lesser value than the old home.
If passed, The Property Tax Fairness Initiative would allow residents over the age of 55 to transfer their locked-in tax rate to a new home anywhere, of any value, as many times as they want. The goal of the initiative is to give retirees—many of whom are on a fixed income—more mobility when it comes to where they want to live. Disabled residents, victims of natural disasters, and residents of contaminated property would also get the same benefits, according to a California Association of Realtors press release.
In the press release, Steve White, president of the California Association of Realtors, stated:
Our goal to provide property tax fairness is within sight, and REALTORS® look forward to building a diverse statewide coalition of voters across California, including senior groups, advocates for people with disabilities and people who have faced property tax spikes after losing their homes to natural disasters or whose homes are found to be on contaminated property. We have the resources and grass roots strength to eliminate the property tax moving penalty, strengthen neighborhoods, and improve housing opportunities for all Californians.
Overall, property taxes across the board will remain unchanged. You can read more about The Property Tax Fairness Initiative here.