Jeanne Radsick, president of The Realtors Group, said recently: “it’s vital for homeowners who may be empty-nesters or who are looking to move for health reasons to have more options. And if they can maintain stable tax basis, they can live a similar life. There’s not enough senior housing to accommodate older folks otherwise.”
Still, beneficiaries of Proposition 19 are those who already benefited the most under the state’s existing property tax laws. Homeowners 55 and older in California are more likely to be older and not poor. Although, an analysis of Proposition 19 by the California Budget and Policy Center, has some interesting things to say. They are a non-profit that is an advocate for working families and lower-income Californians….
At any rate, their analysis tells us that homeowners in California tend to be more white and wealthier and older. They seem to be forgetting that homeowners also happen to be middle class and blue collar; but the study ignores the fact that middle class and working families are the principle users of Proposition 13, Proposition 58 and now of course Prop 19 exclusion for reassessment of property taxes. Although, the real estate industry does i fact stand to benefit from the increase in home sales that is expected as a result of the Prop 19 measure. But there’s nothing we can do about it, so we may as well focus on what we can do to lower property taxes.
However. Property tax relief is not chiefly for wealthy Californians nor was it meant for them. In fact if you crunch the numbers without bias, the high volume of beneficiaries using trust loans to buyout siblings, establishing a low property tax base; while using the parent to child exclusion to avoid property tax reassessment… are mostly middle class. Not millionaires. We don’t quite follow why they keep making that argument. Millionaires surely aren’t the only folks interested in Proposition 13 and Prop 58, property tax transfer, or rather the ability to transfer parents property taxes, to keep parents property taxes while inheriting property taxes during a parent to child transfer, or parent to child exclusion.
We certainly see more working families and upper middle class families buying out a siblings’ share of a mutually inherited home, than we do corporate CEOs. Another key Proposition 58 benefit… allowing for the exclusion for reassessment of property taxes on transfers between parents and children. Not just for rich people!
Ms. Radsick said that protecting Realtors’ interests was not a driving force behind the push for Proposition 19. “It is not about making money for the Realtors, for crying out loud,” she said. “It’s about tax fairness for people who need help.” We need to sit back and really ponder that statement.
Liam Dillon at the Los Angeles Times had some interesting views on the evolving property tax breaks available to Californians. He writes: “The biggest winners under Proposition 19 would be homeowners 55 and older who would pay lower property taxes when moving to a new, more expensive residence. Currently, homeowners who are 55 or older have a one-time opportunity to retain their existing tax benefits if they move to a home of equal or lesser value within the same county. They can do the same when moving between Los Angeles and nine other counties.“
Mr. Dillon goes on to say: “Proposition 19 would further ease the tax burden by allowing the same group of senior homeowners to blend the taxable value of their old house with the purchase price of a new, more expensive home, reducing the property tax payment they’d otherwise face. Disabled homeowners would receive the benefit as well. The rules under Proposition 19 would extend to every county in the state, and homeowners could take advantage of the break as many as three times when they decide to move.”
The downside, from our viewpoint, is the fact that given higher property taxes, using inherited homes as rental properties may soon become unprofitable, without raising rents significantly… and that is not likely to be an effective long-terms solution. The fact of the matter is, these new property tax laws may encourage a lot of residents to sell properties they own, that they intended to leave to their heirs. Hence, realtors and brokers make more money, and that was one intention right from the beginning for Prop 19.
The concern surfacing among analysts revolves around the possibility of important companies leaving California for more business-friendly, lower-taxed states, taking their jobs with them. As well as young white collar folks in their 20s and 30s, seeking more affordable property to settle into in nearby states; with a new job; focused on raising a family where they won’t get blasted every year with super high property taxes and income taxes, along with a high cost of living.
But, on the other hand… Higher property taxes or not, California will always be an attractive place to live. There is still exclusion for reassessment of property taxes; there is still sunshine 12 months per year, an ocean nearby, convenient cities and beautiful rural areas 30 minutes away. And you can always find a good deal on most things, if you look for it. People are always going to want to live in California.