Older California residents who buy pricier homes could save thousands of dollars in property taxes under an initiative that has qualified for the statewide November ballot.
The initiative – backed by the California Association of Realtors – would change a key provision of Proposition 13, the state’s 40-year-old property tax law that ties a home’s assessed value to its sales price and caps the property tax rate at 1 percent of that value.
Under the initiative, people over the age of 55 moving within the state could pay property taxes based on the sales price of the home they are leaving.
For example, if a resident sells his or her home for $400,000 in Sacramento and then buys a condo in San Francisco for $1 million, their property tax rate would be discounted thanks to the lower Sacramento home value. In that instance, if the resident’s Sacramento assessed value was $200,000, the formula would result in a San Francisco assessed value of $800,000 on the $1 million condo, 20 percent less than it would be otherwise.
The initiative also gives older homeowners a break if they move to a cheaper area. If that same resident moved to a $300,000 house in Redding, the property would be assessed at a value of $150,000 under the formula – half what it would be otherwise.
The secretary of state’s office said 585,407 signed petitions were required to qualify the initiative for the Nov. 6 ballot.
Supporters of the initiative said it could help with the state’s housing affordability crisis by encouraging older residents to sell their homes, freeing up much-needed housing inventory.
However, a summary of the initiative by the Legislative Analyst’s Office estimates the initiative would result in property tax revenue losses of around $150 million for cities, counties, schools and special districts that rely heavily on that funding to pay for core services. The loss to those agencies could grow to $1 billion a year.