PROPOSITION 5 — PROP 13 REVISION FOR HOME BUYERS

This critical proposition needs your attention!

For your reference, Propositions 1, 2, and 10 also attempt to address California’s burgeoning housing crisis.

What is this?

This measure would revise the notorious Proposition 13 in order to allow severely disabled or 55+ aged homebuyers to transfer their tax assessment, when buying a new home, from their old home to their new home no matter how many times they’ve moved, no matter the value of the new home, and no matter where in the state the new home is located. An adjustment would occur increasing the assessment if buying a more expensive home, or decreasing the assessment if buying a less expensive home, but in both cases the resulting property tax would be less.

Counties would have the power to decide whether or not Proposition 5 applies to those crossing county lines.

What is Prop 13?

In 1978, voters approved a measure limiting the state’s ability to increase property tax in a single year, regardless of inflation, budget deficits, or any other consideration.

Proposition 60 in 1986 and Proposition 90 in 1990 already made similar amendments for homebuyers aged 55+, but only if they bought a home of equal or lesser value. The latter allowed them to cross county lines with permission of the destination county, so that part wouldn’t change now.

What is a tax assessment?

When the county tells you how much your house is worth and how much property tax you’ll pay. A Zippidee Doo Dah day for most homeowners.

What is the fiscal impact?

Over time, cities, counties, and schools will lose over $1B annually.

YES supporters include the California Association of Realtors and a special PAC called the Homeownership for Families and Tax Savings for Seniors. They argue that seniors on a fixed income cannot afford the tax increase they may suffer when downsizing. 75% haven’t moved since 2000 (it’s important to add that this cannot be attributed solely or even mostly to the tax increase).

The California Chamber of Commerce has endorsed. They claim Prop 5 will increase modest-priced housing and help to ease the state housing crisis as a result. The campaign has raised $7.25M as of the end of July.

NO supporters include the California Teachers Association (CTA), and a host of other liberal groups, who point out that low-income seniors can already downsize. Wealthy homeowners will simply use the new law to buy bigger houses and pay less tax.

The Sacramento Bee calls it a “sham.”

My take, if you care:

With respect to my realtor friends, some of whom would benefit greatly, this thing does not do anything to alleviate the housing crisis; quite the contrary, it will WORSEN the housing crisis, by allowing mega-rich elderly folks to flip homes at an even higher rate, encouraging even MORE construction of mansions and driving up surrounding property values still further. By shoehorning in the severely disabled, many of whom would benefit from this proposition, the 1% hopes to avoid paying as much property tax on their new mansions.

“It will WORSEN the housing crisis, by allowing mega-rich elderly folks to flip homes at an even higher rate, encouraging even MORE construction of mansions.”

Wait, you say, this isn’t about the 1%.

Have you met any 1%ers who are not elderly? There’s a handful, to be sure. Only a handful.

Yeah, I’m a teacher, but my opposition has less to do with school funding and more to do with tax cheats not paying their fair share.

Re-draft this to allow the severly disabled to do what the over-55 crowd is already allowed to do: transfer a tax assessment to a home of equal or lesser value.