Wednesday, October 03, 2018

PROP 5

Your property taxes are based on the price at which you purchased your home, and that tax rate can only be raised by up to 2% per year. With the massive home price inflation we've seen over the past twenty years, many people who sell their home experience a sharp increase in their property taxes when they purchase their next home. The state gives exceptions to people over 55 and disabled people, allowing them to retain the taxable value of their former home, so long as they buy another home of equal or lesser value. The homeowner may use this exception only once in their lifetime.

Prop 5 would expand the program to allow the exception when homeowners buy a more expensive home, and it would reduce the property taxes when they buy a less expensive home. It would also remove the limit on the number of times a homeowner can transfer their taxable value.

One cannot discuss property taxes in California without going back to 1978's Prop 13, an initiative that severely limited the state's property tax revenues. Among the many consequences of the measure is a strong disincentive homeowners have to sell their property due to this increase in taxes upon moving.

So who has a strong interest in getting people to sell their homes? Maybe the CA Association of Realtors, who dumped more than $10 Million into this initiative?

Besides them, who is this bill really helping? Most seniors who sell their homes are downsizing, not trading up. After taking advantage of their appreciated home value, if they want to get an even more expensive home, they're probably doing so because they can afford it. Should taxpayers be subsidizing their lifestyle? And how many times does a senior need to move while retaining the exemption? Twice might be more fair, but this law would make it unlimited.

Our property tax system in California has some serious problems, but this "fix" will favor the wealthy while driving county revenues, and public services, further downward.

Your Political Friend is voting NO.

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