A proposition on this year’s ballot promises a tax break that would make buying a new house more affordable for thousands of Californians. But while Prop 19 would give property tax relief to many, opponents say other Californians will be on the hook to pay for it.
Bob Khalsa bought his Santa Clarita home 10 years ago. He’d like to move to Manhattan Beach, to be closer to his kids. But he says he can’t afford the property taxes.
“That prevents us from moving,” said Khalsa. “So we’re basically stuck where we are. I would love to be close to my children. But I can’t, I can’t afford the payments of property taxes.”
Current law allows Khalsa to move within the same county and keep his property tax basis. But it only applies to homes of equal or lesser value. Khalsa says it would be tough to find that in Manhattan Beach, even if he downsized.
“If I were to buy a small property, it’s definitely going to be higher in value than where I am now,” said Khalsa. “Which means I cannot buy.”
But Prop 19 would change that. It would allow people 55 and older to move anywhere in California, up to three times, and keep their property tax basis. There’d be a slight adjustment when residents buy a more expensive property. Homeowners with disabilities and those who lost homes in wildfires would get perks, as well.
Realtors, anticipating a boost in home sales, have been driving the measure, pouring roughly $40 million into it.
But opponents say while some will benefit from this tax break, others will pay for it.
“It is paid for by a gigantic tax increase,” said Susan Shelley with the Howard Jarvis Taxpayer Association.
Currently, when homeowners transfer property to their children, the property tax basis stays put. This was a measure Californians approved 24 years ago. But Prop 19 would change that. Under Prop 19, when parents transfer properties, taxes would immediately be reassessed on the market value. Taxpayer advocates say this is a huge and unfair tax burden on those families.
“If property is reassessed to market value, the taxes go up not a little, but a lot, a lot,” said Shelley. “And that’s every property. Not just trust funds, not just beach houses, not just rich people. That’s every home. An ordinary three bedroom home that somebody made payments on for 30 years and wants to leave to their kids.”