In November, Californians will vote on four housing-related ballot measures. One of them, Proposition 5, is a Constitutional Amendment.
Proposition 5, the Property Tax Fairness Initiative.
The measure is sponsored by the California Assn. of Realtors and would amend prop. 13 to allow seniors 55 and older, the disabled, and victims of natural disasters, to carry their current Proposition 13-protected property tax assessment level to another home of any price, anywhere in the state, any number of times.
Proposition 13, the 1978 initiative that set up the state’s property tax structure, limited the tax rate for real estate. Under existing law, a home’s tax value is only changed when it is sold. Property taxes are set at 1 percent of the purchase price, and that tax value can only increase by as much as 2 percent a year.
Since Proposition 13 became law, voters also added further protections for seniors.
- PROPOSITION 60: FOR QUALIFIED PERSONS OVER 55. Proposition 60 amended the California Constitution in November 1986. It allows qualified persons over the age of 55 to transfer the base year values from a former residence (original property) to a replacement residence under certain conditions.
- PROPOSITION 90: FOR PROPERTIES IN DIFFERENT COUNTIES. Prop 60 requires that both the old and new homes be within the same county. Prop 90, adopted in 1988, extends Prop 60’s benefits to homes in two counties, but only if the county of the replacement property has adopted a county ordinance permitting the local county assessor to apply the value determined by the county assessor of the original home.
- PROPOSITION 110: FOR SEVERELY DISABLED PERSONS. Proposition 110 was adopted on June 5, 1990 to extend Prop 60 to severely disabled persons residing permanently in the property. Also, in existing homes qualified for a homeowner’s exemption, certain construction, modifications, or installations intended to increase accessibility for an owner or an owner’s severely and permanently disabled spouse, are excluded from reappraisal.
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 different 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.
Proposition 5 would amend Proposition 13 to allow homebuyers who are age 55 or older or severely disabled to transfer the tax-assessed value from their prior home to their new home, no matter (a) the new home’s market value; (b) the new home’s location in the state; or (c) the number of moves.