California’s Proposed Tax Changes Could Effect Real Estate
In November, California voters are set to cast a deciding vote on the Property Tax Fairness Initiative.
This real estate proposal would modify California’s property tax laws. This coming November, voters all around California will weigh in on a number of important issues. One of the most notable ballot initiatives centers around property taxes.
According to recent information provided by California officials; advocates for the Property Tax Fairness Initiative sent in at least one million signatures to the state.
This is far more than the minimum number required; to ensure that their initiative will secure its place on this November’s state ballot. Under California law, homeowners are able to ‘lock in’ their property tax rate. This happened as a result of Proposition 13, which passed in the late 1970s. Proposition 13 has made a huge impact on the real estate market in California. One of the most important things that it does is allow certain homeowners to ‘lock in’ relatively low property tax rates.
For these homeowners, the reduced rate is a major benefit.
However, there are some side effects not considered when Proposition 13 passed in the 1970s. Under this type of system, it makes it far more expensive for certain homeowners to move. If they move, they will lose their desirable tax rate. In effect, current California law creates a ‘moving penalty’ for these homeowners.
The Property Tax Fairness Initiative seeks to provide additional options for Californians who are over the age of 55 or disabled.
It would allow qualifying applicants to transfer their tax basis to any other home within the state of California. As noted by the San Francisco real estate attorneys at Lvovich & Szucsko, P.C.; “If passed into law by our state’s voters, the Property Tax Fairness Initiative would open up many more real estate options for homeowners who are 55 and older and who have locked in a desirable tax rate. Under the current law; these homeowners can transfer their tax basis. However, they can only do it once. And they must stay within the same county. Under the proposed modifications, the homeowners would be able to move anywhere in the state. Finally, they would also be eligible to shift their tax basis as many times as they want.”