Proposition 5 would give homeowners who move a property tax break. Pro: Proposition 5 would help ease the state’s shortage of housing by encouraging more turnover of single-family homes in existing neighborhoods. Con: Proposition 5 would take upward of $1 billion a year away from crucial local services like fire protection.
By Steve White
Steve White is president of the California Association of Realtors and lives in Los Angeles, email@example.com. He wrote this commentary for CALmatters.
Housing construction in California hasn’t kept up with the robust demand in recent years. As a result, qualified buyers struggle to find homes to buy. That undertaking is complicated by the shortage of housing stock and prices that push potential homeowners out of the market.
The squeeze is especially acute for Baby Boomers who want to downsize or move closer to children or grandchildren. If they sell their home, they face a “moving penalty” in the form of a sharply higher property tax bill. So boomers stay put, which means fewer single-family homes are available to meet the growing demand of young families.
Voters can address these problems and eliminate California’s property tax moving penalty by voting yes on Proposition 5, the Property Tax Fairness Initiative.
Proposition 5 would protect people 55 years and older by letting them take their property tax protections with them when they move. The initiative would give them the flexibility to move to more suitable homes closer to loved ones or healthcare facilities.
Seniors aren’t the only ones who would be helped. Proposition 5’s protections would extend to the severely disabled and to victims of natural disasters.
This measure was carefully written to ensure that people still pay their fair share of property taxes.
Let’s say a person’s original home was assessed at $150,000 and sells for $400,000. He or she then buys a new home for $600,000. The new tax base would be $350,000, reached by adding the original tax assessment to the difference between the two sales prices.
So the new property tax bill would increase from $1,500 per year to $3,500 per year. That’s significant but fair. Without Proposition 5 protections, the new property tax bill would be $6,000 per year, four times the original bill and a sum that would dissuade many people from moving.
Proposition 5 would help ease the state’s shortage of housing by encouraging more turnover of single-family homes in existing neighborhoods. It would give young families a greater chance to buy homes, providing stability to neighborhoods, and reinforcing enrollment in local schools.
Other ballot measures passed in recent years allow residents to keep their assessment, as long as their new home’s value is the same or less than their old residence. They can use this exemption once, but only if they stay in the same county or move to one of 10 counties that expressly allow such transactions.
Proposition 5 would clean up that confusing law by allowing people who are eligible to move anywhere in California’s 58 counties as many times as they wish.
California’s Legislative Analyst has opined that these changes would lead to substantial property tax revenue losses to local government. But the LAO did not take into account the broader picture.
More home sales, at a higher assessed value, would generate more revenue and offset projected losses. There would be other economic boosts, such as payment of transfer and escrow fees and spending on housing renovations and furnishings which would generate sales and income tax revenue.
Seniors, disabled people, and natural disaster victims should not be penalized by an unfair, outdated tax system that keeps them from making the housing choices that are best for them. We should fix a flawed system and eliminate the moving penalty by approving Proposition 5.By Sean Burrows
Sean Burrows is president of Alameda County Firefighters, Local 55, firstname.lastname@example.org. He wrote this commentary for CALmatters.
Last year was the most destructive fire season in California history. This year, following the largest fire we have ever witnessed and with a couple of dangerous months still ahead, firefighters are gearing up for the likelihood that the worst is yet to come.
Given these circumstances, it is mystifying – maddening, really – that the California Association of Realtors placed Proposition 5 on the Nov. 6 ballot. It would take upward of $1 billion a year away from crucial local services like fire protection.
Even more galling to those of us who put our lives on the line to protect you, the wealthy real estate interests behind Proposition 5 have premised their campaign on a false claim that the measure would help vulnerable seniors, people with severe disabilities and even wildfire victims.
The important truth is this: Proposition 5 would only put more Californians’ lives and homes at risk from disasters like wildfires by diminishing our state’s capacity for emergency response. Hospitals, health clinics, mental health care, libraries, and other local services all would take a hit.
If that wasn’t bad enough, the Realtors’ initiative would drain an additional $1 billion a year in local funding for our schools.
Firefighters, teachers, health-care workers, seniors, affordable housing advocates, and middle-class taxpayers have joined forces to urge a no-vote on Proposition 5.
After spending $7 million to pass Proposition 5, the Realtors are hoping voters won’t learn the truth about what it means. Here are the facts:
- Homeowners over 55 get lower property tax bills when they buy a home equal to or lesser than the value of their current home.
- For more than 30 years, this law has allowed middle-class retirees to find a more suitable home if they need to be closer to family or trade in their two-story for a home without stairs.
- Voters liked these constitutional protections so much, they’ve passed initiatives to expand the protection to people with severe disabilities and to allow disaster victims to rebuild their homes without paying higher taxes.
Proposition 5 is a perversion that would allow wealthy property owners over 55 to get a new tax break every time they trade up to more expensive home, whether it’s alongside the ocean or on a golf course. There are no limits to how many times a wealthy property owner can use this new tax advantage.
The real intent of this scheme isn’t to help struggling seniors, people with disabilities, or wildfire victims facing a housing crisis. The law already protects these Californians from higher property taxes under current law. Instead, Realtors would generate more high-commission sales for real estate agents.
Nothing in Proposition 5 would help seniors who are hurting the most because of high housing costs. In fact, it would only make matters worse by driving costs even higher, according to the nonpartisan Legislative Analyst.
As a firefighter, I can’t stand by while narrow interests hurt people who depend on the vital services, including fire protection and education. Our communities can’t afford Proposition 5.