is qualifying a ballot measure. The ... Under current law, homeowners 55 years of age or older can .... If a homeowner b
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Illus t ra t ion By Rich Morgan
#UNLOCKHOMES:
PROPERTY TAXES LOCKING SENIORS IN HOMES HOW CALIFORNIA’S SENIORS, DISABLED, AND VICTIMS OF NATURAL DISASTER CAN PORT THEIR PROP. 13 PROPERTY TAX SAVINGS TO NEW PROPERTIES.
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PORTABILIT Y
I
t’s no secret that California is in the midst of a housing crisis. Not only is affordability near an alltime low, but housing inventory remains stubbornly low – wreaking havoc on the market and reducing homeownership opportunities for many would-be buyers in California. On top of these challenges, nearly three-quarters of homeowners 55 years of age or older have not moved since 2000, further constricting inventory. Research has indicated that one of the primary reasons these homeowners are effectively “locked” into their homes is the prospect of paying higher property taxes. To protect these seniors, along with the disabled and victims of natural disasters – as well as free up some of this inventory – C.A.R. is qualifying a ballot measure. The Property Tax Fairness Initiative will help these homeowners sell their current homes and move without being subjected to what is effectively a massive “moving penalty.” These homes will then be available for families and other wouldbe buyers to purchase, increasing their assessed valuations, revitalizing communities, and making California better.
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How It Works
Under current law, homeowners 55 years of age or older can transfer their Prop. 13 property tax base – only once – to a replacement home located in the same county, and only if the purchase price for the replacement home is equal or less than the sale price of the original residence. In limited instances, these homeowners can also transfer their Prop. 13 property tax base to a home located in a county that allows the transfer. Most counties do not make this allowance, and because of these arbitrary and geographic restrictions, the “moving penalty” is insurmountable. California can and should do better for people who have paid their fair share in property taxes and simply want to continue doing so as they progress in life. Current law says no, but C.A.R. is giving voters a chance to say YES! C.A.R.’s Property Tax Fairness Initiative would allow homeowners 55 years of age or older to transfer their Prop. 13 tax base to a home of any price, located anywhere in the state, any number of times. These protections are also extended to people who are disabled and those who have lost their homes to a natural disaster. It’s a carefully written initiative that includes appropriate safeguards while eliminating California’s property tax “moving penalty.”
Prop. 60 Under Prop. 60, senior homeowners – 55 years of age or older – may transfer their property tax base to another home in the same county so long as the purchase price of the replacement home is equal to, or less than, the sale price of the original residence. But if a senior is moving from the Central Valley to Los Angeles or San Francisco, there’s no way they can do so and keep their protections. Additionally, a senior homeowner is limited to making only one such transfer over the course of his or her lifetime. And, if their spouse has already transferred a property tax base, that senior
homeowner is disqualified from making another transfer of the tax base. Prop. 90 Prop. 90 is an extension of the original Prop. 60 program. Prop. 90 allows senior homeowners to transfer their property tax base to a home in a different county so long as that county accepts such transfers. There’s no need for the local political process to influence the property taxes of seniors, the disabled and victims of natural disasters. Both Prop. 60 and Prop. 90 are relatively limited, which is where C.A.R.’s Property Tax Fairness Initiative comes in.
Why It’s Needed Now
Under Prop. 13, homeowners are protected from rapidly increasing property taxes. However, seniors, who are often on a fixed income, fear they will not be able to afford a big property tax increase if they sell their existing home and buy another one, discouraging them from ever moving. This initiative will allow them to sell their home while keeping some property tax protections and continuing to pay their fair share in property taxes, thereby creating homeownership opportunities for new buyers.
How Property Tax Assessments Currently Work The amount any homeowner pays in property taxes is based on the assessed value of their home at the time of purchase. Generally, Prop. 13 limits property taxes to 1 percent of the assessed value at the time of purchase even if the value of the property subsequently increases. Unfortunately, homeowners lose their Prop. 13 property tax savings when they move to another home. There are two other Propositions that affect property tax basis: Prop. 60 and Prop. 90. C.A.R. believes these laws were a good first step, but their arbitrary nature and complicated restrictions need to be reformed.
What’s Next
C.A.R.’s professional campaign team, working with REALTOR® volunteers across California, is working to gather nearly one million signatures to qualify it for the November 6, 2018 General Election Ballot. The team is also building a comprehensive voter education program to inform and share with voters why this
Buy Up Example $100,000
Original Purchase Price:
The $100,000 difference between the existing home sale price and the new home purchase price is added to the original Prop. 13 property tax base for a new tax base of $200,000. The buyer still pays their fair share of taxes but isn’t blocked from making the move.
Buy Down Example $100,000
Original Purchase Price: Estimated Property Taxes: Existing Home Sale Price: New Home Price: New Property Taxes w/out Property Tax Fairness: Property Taxes w/Property Tax Fairness Initiative:
If a homeowner buys a less expensive home, the property taxes will be proportionally the same as for the original home. In other words, if the tax base was one-third of the sale price, the new property tax would be one-third of the new sale price. Buying down reduces the homeowner’s annual property tax bill. It’s the right thing to do, and when the home they sold is reassessed, it will generate more property tax revenue.
initiative is so important for California’s future. The Property Tax Fairness Initiative is the latest example of REALTOR® leadership, fighting for homeownership and protecting seniors, the disabled and victims of natural disasters. Learn more by emailing
[email protected].
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