According to the San Diego Union-Tribune, at last Thursdays news conference called by San Diego Regional Chamber of Commerce and the Greater San Diego Association of Realtors, one of the many ideas discussed was to amend Proposition 13. Real estate leaders proposed the amendment to give homeowners a tax break when they sell, which would generate more supply and reduce pressure on prices. For homeowners that have been at their property for a while, this could mean thousands of dollars of lower property taxes when they move up or downsize.
Local Realtors President Bob Kevane was the one who proposed the Proposition 13 change. He’s been thinking about the idea for a decade, but believes it is a needed improvement with the low inventories.
He said, “I think the majority of California property owners who have had their homes for five or six years are not moving because of Proposition 13. It’s basically locking them into their current residence and not providing the normal move-up markets we’ve had in the past.”
Under Proposition 13, California properties are reassessed at market value only when they are sold. The tax is then set at 1% of the new value plus extra assessments. Between different changes of ownership, the assessed value can go up by inflation. If the homeowner makes a huge improvement, it’s added to the assessed value but it does NOT trigger a reassessment of the entire property.
This means that when the home changes owners, the new owners will pay more property tax than the sellers had because the home is reassessed.
Under the proposed change, buyers would carry over their tax basis plus what is owed on the difference between the sales price on the old and the new properties. If the new value is less than the old value then the old tax bill would apply.
Kevane’s proposal would make a former senior discount under Proposition 13 available to all sellers every two years without age, income, or price restriction. This means that the seller would keep their old tax base only if their replacement home price is no more than their sold property’s price. Older owners would still benefit because they wouldn’t be limited to invoking the discount once. Children who inherit their parents’ homes could also continue to enjoy the lower tax base if or when they choose to move.
The state association will hopefully announce the ballot campaign by August 22, which is the deadline set to launch statewide citizen initiatives. Kevane said he will speak with state Senator Toni Atkins and other legislative leaders to see if they will put on the measure on the ballot directly.
Check the original article at the San Diego Union-Tribune: