The Proposition 13 Tax Transfer Initiative will be on the ballot in November. If passed, it will give those 55 and older the ability to take their old property-tax basis with them, no matter (a) the new home’s market value; (b) the new home’s location in the state; or (c) the buyer’s number of moves. But the tax basis will be subject to a re-calculation, depending if the new home is more or less expensive.
The California Association of Realtors is also pursuing a legislative alternative that will eliminate intergenerational transfers of primary residences and other inherited property being used for income-producing purposes without reassessment.
The kids and grandkids have enjoyed taking over their elders’ homes – and their typically ultra-low tax basis that transferred. The state legislature could change that in August, which would bring in additional revenue to compensate for those seniors taking their old tax basis with them.
Click on Read More below for details:
The California Proposition 13 Tax Transfer Initiative has qualified to appear on the ballot in California as a combined initiated constitutional amendment and state statute on November 6, 2018.
| A “yes” vote supports amending Proposition 13 to allow homebuyers who are age 55 or older or severely disabled to transfer their tax assessments, with a possible adjustment, 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 buyer’s number of moves. |
| A “no” vote opposes amending Proposition 13 to change how tax assessments are transferred between properties for homebuyers who are age 55 or older or severely disabled. |
On May 17, 2018, the secretary of state announced that enough signatures had been verified for the initiative to be placed on the ballot for the general election on November 6, 2018.
Overview
What changes would this ballot initiative make to state law?
The measure 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. As of 2018, homebuyers over 55 years of age were eligible to transfer their tax assessments from their prior home to their new home if the new home’s market value is equal to or less than the prior home’s value and once in their lifetimes. Furthermore, counties, not the state, decide whether tax assessments can be transferred across county lines.
If the new home is a different value than the prior home, the initiative would allow for an adjusted value between the old and new values. If the new home has a higher market value then the prior home, the assessed value would be adjusted upward. If the new home has a lower market value then the prior home, the assessed value would be adjusted downward. The formulas for the adjustments would as follows:
Upward adjustment: (assessed value of their prior home) + [(the new home’s market value) – (the prior home’s market value)]
- Example: An individual sold her house for $500,000. The house had a tax-assessed value of $75,000. She bought a new house for $800,000. The tax-assessed value of the new house would be ($75,000) + [($800,000)-($500,000)] = $375,000.
Downward adjustment: (assessed value of their prior home) × [(the new home’s market value) ÷ (the prior home’s market value)]
- Example: An individual sold his house for $500,000. The house had a tax-assessed value of $75,000. He bought a new house for $300,000. The tax-assessed value of the new house would be ($75,000) × [($300,000) ÷ ($500,000)] = $45,000.
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June 28, 2018
Dear Jim,
I want to give you an update on C.A.R.’s historic effort to address California’s unprecedented housing supply crisis, as well as how to increase homeownership opportunities for Californians. Known as the Property Tax Fairness Initiative, the initiative would remove the “moving penalty” for seniors 55 and older, the disabled, and victims of natural disasters, allowing them 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.
With your help, C.A.R. achieved its initial objective by gathering 1 million signatures – enough to qualify the initiative for the November 2018 General Election Ballot.
Last month, I informed you that C.A.R.’s Board of Directors, after careful deliberation, voted to proceed with the 2018 ballot measure while seeking a legislative alternative.
The legislative alternative contains the provisions of the Property Tax Fairness Initiative and would also eliminate intergenerational transfers of primary residences and other inherited property being used for income-producing purposes without reassessment.
Despite the fact that intergenerational transfers reforms will offset the estimated lost tax revenue, opposition continues to be strong and the legislative alternative will not be approved before the current June 28 deadline for C.A.R. to remove the initiative from the November ballot.
With that in mind, yesterday a group of decision makers, including C.A.R.’s Executive Committee, Regional Chairs, Committee Liaisons, and Key Committee members provided input to the Leadership Team, which decided to keep the current initiative on the November 2018 ballot and file a revised initiative with the Attorney General for preparation of title and summary for the November 2020 ballot.
This option will allow C.A.R. to pursue its objective on several fronts. C.A.R. Governmental Affairs staff met with the Attorney General’s Office and the Legislative Analyst’s Office to get revisions to the title and summary, as well as to the fiscal analysis, that will appear in this November’s General Election Voters Pamphlet; these will be released on July 24. And, while the current deadline for removing initiatives from the ballot is June 28, it is possible the legislative alternative – with an exception to the deadline included – could be approved when the legislature returns from its summer break in August.
The November 2020 ballot initiative will move portability forward while at the same time generating revenue for schools and local governments by: 1) requiring reassessment in connection with inter-generational transfers where heirs keep property for investment purposes; and 2) tightening up the reassessment law to address corporate property transfers where “creative” efforts are used to avoid reassessment.
C.A.R.’s resolve on this issue is firm. C.A.R. is committed to winning at the ballot box this November, achieving a legislative alternative, or winning in November 2020. REALTOR® investment of time and resources as part of this grassroots effort will benefit clients, homeownership, and California.
We are confident that we will ultimately be successful gaining voter approval of the Property Tax Fairness Initiative.
Thank you for all that you do for our industry. Working together, we are making a difference.
Sincerely,
Steve White
2018 President
CALIFORNIA ASSOCIATION OF REALTORS®
Am I missing something, this ballot initiative seems like a good idea?
Sociopath politicians are continuing to try to mitigate sanctuary city policy by increasing taxes when, eliminating sanctuary city policy, supercharged by friendly cooperation with ICE authorities, rentals and housing stock would be far better supplied.
In the working class area where I rent units, the area is chock full of middle-aged and older “immigrants” who don’t speak a word of english, rely on weasel property owners who don’t mind renting 3 families to a one bedroom apartment at top-of-the-market prices. Many of these immigrants make money through California’s massive “shadow economy” of untaxed employment, or entreprenurial enterprises such as food carts, gardening, movement of goods and services via advertising in facebook and craig’s list. Then they send the money to relatives out of the country to boost the parasite nation’s economy.
Until that is waded into, and corrected, no new taxes, no new reforms to Prop 13 that enables any new taxes, in any way.
Government fiscal interference in capital markets warps capital markets. Advocating for warped markets is usually evil.
Like illegal immigrants hide behind their alleged children to commit a crime, liberal politicians hide behind “good intentions” to mask their evil intent, then they run like hell from the inevitable evil outcome.
Example: “The legislative alternative contains the provisions of the Property Tax Fairness Initiative and would also eliminate intergenerational transfers of primary residences and other inherited property being used for income-producing purposes without reassessment.”
If successful, rents will go up significantly, and longtime tenants will be effectively evicted, since they won’t be able to handle the rent increases. So, the trustifarians or family businesses won’t suffer the tax increases. The renter’s will.
The cited paragraph doesn’t address this, because it’s not transparent. It’s manipulative, in an attempt to gain more tax from “poor” renters, while attempting to look like “fair taxes,” and this qualifies as “evil,” by my reckoning.
Meanwhile, the pyrotechnically failed economic strategy of declaring one’s city a “sanctuary city” while adjoined to a failed, corrupt state (Mexico and it’s economic southern satellites) is not addressed whatsoever.
That’s evil.
And finally, these days, living in the United States is a skill. Not everyone is up to the challenge of being functional in a relatively complex civilization, even the native born. United States citizens in trouble are the folks we should be fighting to take care of first. With our current limited resources, ignoring them to accommodate a foreign national gaming our system is an act of evil. Vote negative on any new taxes, or “clever” manipulations of Prop 13.
https://www.youtube.com/watch?v=lg1qE7PSMQo
https://www.youtube.com/watch?v=Js9kZBzBsNs
Am I missing something, this ballot initiative seems like a good idea?
It sounds good, and I like it when C.A.R. is doing something to help create more commission-making events.
But I am very skeptical that it will have more than a minimal effect.
Almost all of the down-sizers are already covered in Prop 60/90. How many seniors need to buy up, or move to one of the dumb counties who weren’t on the list?
Locked in by low property taxes are only one of many reasons seniors don’t move. Even if this hurdle is eliminated, how many NEED to move who only had one thing -their low tax basis – be what was holding them back?
Usually there is a longer list, and more intimidating:
1. Go through the stuff
2. Throw away stuff
3. Get house ready to sell
4. Sell house
5. Find new house
6. Buy new house
7. Move to an unfamiliar neighborhood
8. Need new doctors/dentists/accountants etc.
9. It’s too hot/cold there
10. WE LOVE IT HERE
@ Daytrip
As an amateur student of American history and having spent 2 years in its school system let me point out that after beating the British with the continental army George Washington re imposed every single import tax George III had ever levied including that on tea then he enlarged the continental army and used it to impose taxes on American locally produced goods including liquor:)
Look up whisky rebellion 😉
It no doubt made those who had lost family fighting the British for imposing what they thought were high taxes very happy.
Adrewa,
I’ve read a two volume biography of Washington. Since the birth of this country was leveraged on the need for a miracle, one of which arrived via the French at the last possible moment, I’m not against a “miracle tax,” when it results in the early maintenance and reinforcement of the greatest country in the history of the world.
I agree that people should brush up on their General Washington. He was a rock star.
Those who lost family members fighting the british, I’m sure felt some mitigation by the fact that a massive new frontier ripe for settling at minimum cost for the land (and land ownership was better than gold to a former brit) immediately materialized for their pleasure. Also the fact that they didn’t have to answer to some two-bit, mono-toothed semi-retarded Lord on a day-to-day basis must had helped dry a tear or two.
Everyone who is breathing air in this country has won existential Lotto. I don’t care if you live in a mansion, or under a freeway bridge, you’re the luckiest s.o.b. on this good planet, by far, and that’s prehaps our problem.
We squander our resources like any multi-millionaire’s idiot son who never lifted a finger to obtain anything himself, and so his mission in life is to justify his existential premise of entitlement, rather than gratitude, and vigilance.
And that’s why so many, have so much, and are still so unhappy.
All that said… regarding an additional tax on citizens residing in the most prosperous and dynamic state in the Union… no new taxes. On anything. If the governor proposed a new tax on male gang-rape, I would vote against it, and so should we all.
@Daytrip
Those who opposed new taxes in Washington’s time were convicted of being traitors. I presume you are against the tax on whisky? If despite your vote new taxes ARE imposed in California I can assure you the state will emulate George Washington and lock you up if you fail to pay them.
Income tax was introduced in Britain supposedly for a brief time only to pay for the war with Napoleon. Britons are still paying it just like Washington’s whisky tax is still being paid by Americans 🙂
Andrewa,
I think my mistake is that I seemed to imply that I’m against taxation. If so that’s my bad. I’m not against taxation. What I am against are any further state taxes in California. I am well aware of the consequences of not paying taxes, and I don’t recommend it, but advocating against further taxes in the most financially prolific state in the Union seems to me to be a reasonable practice.
When state government makes an egregious mistake, the remedy isn’t taxing it’s citizens to maintain the mistake. The remedy is to eliminate the mistake. Declaring California as a Sanctuary State, is a mistake. It’s costing us dearly now, and will get even worse in the future. California was originally desert scrubland, and if you get some time, google Lake Mead, and see what’s coming up around the bend for us. California citizen’s obligation to mitigate health care benefits for people’s gardener’s and nannies is unsupportable in the long run.
We can’t support the influx. A friend of mine recently retired early from teaching. She said she can’t teach a class of 45-55 kids. Likely those kids will get a teacher who just wants a check, or lacks much experience. Multiply that episode across the state, and the future doesn’t look as bright as it should for the state of California.
As technology progresses (there are machines that can pick avocado’s now) there will be less and less for the low-skilled to do. High taxes will not mitigate what’s in store for us, it will only accelerate the decay. We should shame and/or vote out any politician who suggests it.
I’ll just close be reiterating, “no… new… taxes.”
@ Daytrip,
So if I understand you correctly you feel the same about taxes as the whisky rebels? In other words ” no new taxes” 🙂
Not that it did them any good of course, turkeys never vote for thanksgiving so you can expect the recipients of California’s largesse to vote for more.
Andrewa,
So, if this point in the discussion ends in a stalemate, regarding a new government’s strategy of curbing alcoholism along with remedying a staggering war debt, as well as maintaining a new militia in shaky circumstances, are you going to ask me, if a thimbly-spined Homosapien tribal leader chooses to pay a burly Neanderthal entrepreneur 3 saber-toothed tiger incisors a month to protect his village from marauders, would I denounce it as a new tax, to remain consistent with my supposed philosophy?
I believe that taking my premise back to post-revolutionary war America’s tax strategies isn’t relevant to California in 2018, altho I believe if Benjamin Franklin could see our current circumstances, he might throw up in his ethereal mouth, a little.
Daytrip,
My wife’s best friend is a teacher in Southern California and just received a raise. She is making $100,000 a year teaching kindergarten. Now she is thinking about retirement at age 61. I keep telling my wife if the parents new how much money she is making they would be in shock. She is oblivious to it all. This is the crazy world we live in.
“This is the crazy world we live in.”
And I’m aiming for a crazy world with no new taxes!