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Property Tax Fairness Initiative (Portability) May Be Coming to CA

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Property Tax Fairness Initiative (Portability) May Be Coming to the November 2018 Ballot


The California Association of Realtors (C.A.R.) has sponsored signature gathering efforts to get the Property Tax Fairness Initiative, sometimes referred to as the Statewide Tax Portability Initiative on the November 2018 ballot.  The initiative would expand upon the existing benefits of Proposition 60 and Proposition 90.

If passed, the Property Tax Fairness Initiative will:

  • Let seniors aged 55+ to move to a replacement property in any California county while maintaining their current property tax base.
  • Allow for a blended tax rate should a senior buy a replacement home more expensive than the one they sell.
  • Enable seniors to use the benefit multiple times.
  • Ease the lack of inventory that’s been a source of frustration to so many buyers.

Let’s take a step back for a moment to go over the existing law:

It starts with Proposition 13, which was passed in 1978 and lowered property tax rates from 3% to 1%.  When a property is purchased, it is taxed at 1% of the property’s market value.  Annual increases in property tax are limited to 2% unless the property is sold, at which point it is reassessed at the new market value.

As an example, a person who purchased their home in the 1990’s for $200,000 pays property tax based on that $200,000 purchase price.  Their property taxes can increase by a maximum of 2% per year. Their home may now be worth $750,000 and because Proposition 13 puts a cap on property tax increases, their annual property tax bill is about $3,500 annually.  If that same property was purchased today for $750,000, the tax would be approximately $7,500 annually.

Tax portability allows a senior aged 55+ to transfer that lower tax base (portability) to a replacement property through the use of Proposition 60 or Proposition 90.

Proposition 60 allows homeowners aged 55+ a one time benefit to transfer their tax base when they sell their home and purchase another in the same county for the same or lower market value.  If specific criteria is met, they can buy a home up to 110% of the value of the home they sold.

Proposition 90 allows homeowners aged 55+ a one time benefit to transfer their tax base to a replacement home of equal or lesser value in a participating county in California.  Here again, if specific criteria is met, they can buy a home up to 110% of the value of the home they sold.

While Propositions 60 and 90 offer terrific benefits, they’re limited.  The Property Tax Fairness Initiative will remove some of the limitations and allow seniors to move to any California county and maintain their tax base if they buy laterally or get a blended tax rate if they buy up.  The increase in available inventory that will occur as seniors take advantage of the new benefit if the initiative is passed, will be a welcome change, especially for buyers trying to break into the housing market.

To read what C.A.R. has to say about the Property Tax Fairness Initiative/Statewide Tax Portability Initiative, click HERE.

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Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Hello Jill,  I just don't see how this will increase inventory:   

"The increase in available inventory that will occur as seniors take advantage of the new benefit if the initiative is passed ..." 

Mar 11, 2018 01:17 PM
Jill Murty, Realtor - Orange County, CA

A lot of seniors don't move because they don't want to lose their Prop 13 benefit.  If the initiative passes and the "moving penalty" goes away, seniors will be able to move to any CA county and also move up if they want to while maintaining all or a portion of the tax benefit.  I think that'll open inventory for buyers wanting to get into the housing market.

Ultimately, we'll have to see how it plays out.

Mar 11, 2018 07:00 PM
Raymond Denton
Homesmart / Evergreen Realty - Irvine, CA
Irvine Realtor®

I love the new initiative, Jill.  95% of my Client base are impacted by Prop 60 or 90, and removing the limitations will result in more Older American's moving to new homes.  The restriction I encounter mostly is the value of the house ... lots of Seniors want to purchase a property that costs more then the one they own.

Mar 12, 2018 08:36 AM
Jill Murty, Realtor - Orange County, CA

I run into a lot of seniors who want to buy up, too.  The blended tax rate is one of the best parts of the initiative.  I think it'll inspire seniors to move because it will enable them to maintain a portion of the tax benefit.

I've actually had people propose buying a listing for a lower price and pay the listing side costs in order to preserve the tax benefit. I wouldn't suggest a client take that approach, but some agents do. 

For now, we wait to see if it gets on the ballot and then see if it passes.  As I understand it, the initiative has widespread support.

Mar 12, 2018 09:04 AM

CAR Board of Directors voted on a parallel route for achieving certain goals by proposing to set aside the Property Tax Fairness ballot initiative set for the November 2018 election to the March 2020 election. See letter from the Executive office dated 5/5/2018. Steve White - President:"I want to inform you that this morning in Sacramento, C.A.R.’s Board of Directors, after careful deliberation, voted to proceed on a parallel route for achieving our goals and ask the legislature to put our measure on the ballot for March 2020. If that effort is successful, we will not need to pursue our initiative for the November 2018 ballot."Contact CAR Board of Directors and say NO!

May 08, 2018 09:34 AM

What is the advantage of asking the Legislature to put it on the ballot March 2020 rather than putting it on the ballot November 2018? Isn't it just delaying the Initiative?

Are you advocating a NO vote on either?

May 10, 2018 05:37 PM