California Realtors Hope Ballot Initiative Will Put More Homes on Market

This will be the third time a proposition has gone to voters to loosen restrictions on home sales for those benefiting from Prop. 13.

"In 1986 and 1988 respectively, Proposition 60 and 90 was passed that allowed older homeowners a ‘one-time transfer’ of their low Proposition 13 taxes to a new home of equal or lesser value, as long as they were age 55 or over or were disabled," wrote Anderson of Coldwell Banker. 

Prop. 60 restricted the homeowner to move to a home in the same county, and Prop. 90 broadened the number of counties the homeowner could move to, as long as both counties participated in the tax-sharing program.

Anderson explains how the property tax benefits would be transferred, or blended, to the new property, which depends on whether the new home is pricier or less costly than the home being sold:

• More expensive: Say a couple owned a home for 30 years and its current assessed value is $75,000, meaning they pay $750 in annual property taxes (1% of $75,000). They then sell the home for $600,000 and buy a new one for $700,000. Their new tax assessment would be $75,000 plus $100,000 (the difference between the old home’s sales price and the new home’s sales price). Their new property tax would be $1,750.
• Less expensive: Say the same couple sold their old home for $600,000, then paid $500,000 for a condo. Since the condo’s price is 83 percent of the old home’s sales price, the new assessment would be 83 percent of the old, or $62,500. Their new property tax would be $625.

Cost to the local governments and schools

"The nonpartisan Legislative Analyst’s Office [LAO] has estimated the change would cost local governments and schools a combined $300 million a year, with costs rising to $2 billion annually over time," notes Dillon.

Should the measure pass, the tax benefit in the new home will be transferable to the seniors' children, just as it would be with the owners' original home, according to an email from the California Association of Realtors.

More criticism

This proposition only continues the problems created by the original Proposition, opines Ed Kilgore for New York Magazine on May 18. "California’s Realtors are not challenging Prop 13, but instead fighting to expand it..."

“This seems like, ‘Let’s solve Prop. 13 by having more of it,’ ” said Laura Clark, executive director of San Francisco-based YIMBY Action, a pro-development, millennial-led group that has joined others in calling for reforms of the decades-old property tax law. “We’re talking about, once again, another tax giveaway to people who are wealthy.”

Two other housing initiatives have also qualified for the November ballot:

• The California Housing Loans, Grants, and Programs and Veterans' Loans Bond, a legislatively referred bond act, would authorize $4 billion in general obligation bonds for housing-related programs, loans, grants, and projects and housing loans for veterans.

• The California Local Rent Control Initiative, an initiated state statute, would repeal the 1996 Costa-Hawkins Act that places limits on rent control ordinances.