The Property Tax Fairness Initiative (Portability) has obtained enough signatures to qualify for the November ballot in California. This is good news, because now owners over 55 years of age could have the opportunity to take their Proposition 13 tax base anywhere in the state, not just select counties, and be able to use it more than once. The campaign to gather signatures has been successful through the efforts of the California Association of Realtors, and the many Realtors who helped to get the word out and obtain signatures.If passed, this Initiative would allow homeowners 55 and over to transfer their Prop. 13 tax base to a home of any price (current limitation is a sale price equal or lesser than sale price of original residence), to any county in the state. Currently, there are only a minority of counties (as per Prop. 60 and Prop. 90) which participate in this plan, creating geographic disincentives to move since moving to a non-participating county could cause a huge increase in property taxes for those in fixed-income retirement or nearing retirement mode. Currently, a homeowner living in Los Angeles County can benefit from current Prop. 13 tax base if they sell and stay within L.A. County, or sell and go to Orange County, Riverside County, and numerous others in the group--but with the passage of the new tax portability, a homeowner would still be paying a Prop. 13 fair share tax, but would be given the benefit of moving to any county and not lose their base.
The passage of this initiative would benefit a lot of people beyond the 55+ age group, it also applies to people who are disabled and those who have lost their homes to a natural disaster. Additionally, more movement would be created in the residential real estate market, potentially creating a lot of economic benefit to move-up and first time buyers in what has been a very tight inventory.
Sample scenarios from the California Association of Realtors:
"Buy Up Example
Original Purchase Price: $100k Estimated
Property Taxes: $1k/annually
Existing Home Sale Price: $300k
New Home Price: $400k
New Property Taxes: $2k/annually.
The $100k difference between the $300k sales price and the $400k purchase price is added to the original Prop. 13 property tax base of $100k for a new Prop. 13 tax base of $200k.
"Buy Down Example
Original Purchase Price: $100k
Estimated Property Taxes: $1k/annually
Existing Home Sale Price: $300k
New Home Price: $200k
New Property Taxes: 1/3 of $200k = $67k or $670/year for property taxes
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."
Please follow this issue as the year progresses!!
I am available for home value information at my phone contact information, or through my website.
Update: May 8: At their recent meetings (Sacramento, May 2 -- 5), California Association of Realtors directors voted to pursue an alternative to the ballot initiative... It would be to seek support to have the legislature place the issue on the ballot in 2020. By seeking such legislative support, CAR would be able to free up resources to address other crucial issues in 2018. Whether this alternative will be possible won't be known until late June.
