Current Category:KFSN Fresno | | July 3, 2018
FRESNO, Calif. (KFSN) — Under California’s Proposition 13, property tax increases are limited, so over time, a home could be worth a lot more than the value it is taxed on. The taxed value doesn’t reflect the current value until the home is sold.
Fresno Realtor Don Scordino believe that tax rule has kept some people 55 and older from selling and buying another home.
“There is some people they don’t want to move because they will lose their property tax basis.”
That’s why the California Association of Realtors is pushing Proposition 5 on the November Ballot.
It would preserve those lower property taxes for older Californians who sell their home.
The process is a bit complicated to explain, but the Legislative Analyst’s Office used this example:
A 55-year-old couple owns a home with a taxable value of $200,000 and a market value of $600,000. At a property tax rate of 1.1 percent (the statewide average), their yearly property tax bill is $2,200.
The couple is considering moving to one of two different homes: one with a price of $700,000 and one with a price of $450,000.
If the couple buys the $700,000 home, under the current rules, their tax bill increases to $7,700, based on full value of the new home. Under the proposed rule, the couple would only pay taxes on an assessed value of $300,000: the assessed value of the old home ($200,000), plus the difference between the new home and old home ($100,000). In this scenario, the couple’s tax bill increases to only $3,300.
If the couple buys the $450,000 home, under the current rules, their tax bill will stay at $2,200. Under the proposed rule, since the value of the new home is 75% of the value of the old home, the assessed value would be reduced by 75% to $150,000, leading to a yearly property tax bill of $1,650.
Scordino says the goal is to give older folks incentive to move, ” This ballot proposition’s goal would be to free up the inventory by allowing seniors to move to a new place and move their property tax assessment with them.”
But the Legislative Analyst’s Office estimates it could cut tax revenue to local governments and schools by $150 million in the first year and up to $1 billion in the long term.
Fresno County Assessor Paul Dictos says, “Every community will be impacted, every local government will be impacted, all over the state. It is good for the people as we have more and more aging population you know, but the services are going up, and the cost of the services are going up and who’s going to pay for that?”
Realtors say the losses could be offset when new buyers purchase the older homes and pay the full tax rate.
Dictos is uncertain how it will play out. He says it is possible that older residents will bring their lower tax bills to Fresno County.
“It all depends on how many people flood into Fresno County from San Francisco and other areas. We don’t know yet.”
This proposal is an amendment to Proposition 13. If passed, it would allow this property tax portability statewide, and not limit the number of times it can be done by a homebuyer who is 55 or older or disabled.
Voters will decide on November 6th.Read at Original Source