Proposition 13 (Prop 13) may undergo changes from a proposed ballot initiative for the 2018 statewide elections.
The measure, sponsored by the California Association of Realtors (CAR), seeks to amend Prop 13 by allowing all home sellers to apply a portion of their existing property taxes at the reduced rate to a replacement property, no matter the value. This method carries over a homeowner’s property tax, plus the difference between the property tax bill for the old and new properties based on their current market values.
For example, consider a homeowner whose current property tax bill is $4,000. They sell their home for $500,000 and purchase a replacement home for $600,000. Under the proposal, the new property tax paid by the homeowner is $5,000. This is determined by adding the difference in the assessed property taxes on the two properties ($6,000 – $5,000 = $1,000) to the property tax amount carried over from the previous property ($4,000).
Currently, only homeowners over the age of 55 in some California counties may transfer their present property tax rate to a replacement property of equal or lesser value. Unlike the proposal, this transfer maintains their existing property tax bill as is.
The measure intends to encourage sellers to relocate without fear of drastically increased property taxes, adding much needed supply to the high-demand real estate market, according to the authors.
Source: First Tuesday Journal