Current Category:The Mercury News | | December 13, 2017
We published a story this week about a ballot initiative to allow homeowners over 55 to move anywhere in the state, as many times as they want, without a big jump in their property tax bills.
Judging by the volume of responses, the idea — and the piece about it — hit a nerve.
“The reason I’ve stayed in my old house is because I’m old and decrepit and I don’t want to die in an old folks’ home,” said Norman Bradley, 90, who said he has lived in the same, 1,000-square-foot house San Leandro for close to 60 years. “I have to stay here,” he added. “I’ve got nowhere else to go.”
The California Association of Realtors, which is gathering signatures to qualify the initiative for the November 2018 ballot, argues it would boost the supply of single-family homes on the market by encouraging people who want to move to do so. Many longtime homeowners, they say, are stuck in their houses because of their low property taxes, which they would lose if they moved to certain parts of the state. Proposition 13, which voters passed in 1978, keeps property taxes from soaring as a home appreciates.
The Legislative Analyst’s Office estimates the realtors’ initiative would ultimately cost schools, cities and counties some $2 billion annually, statewide — even after taking into account the higher property taxes that some of the new buyers would pay.
The wide-ranging responses to the piece underscored just how thorny, complex and wrought with emotion the underlying issues are. For instance: Even though the initiative would not affect those who want to stay in their homes, some were offended by the mere suggestion that they should move on to make way for younger families. Others enumerated all of the other reasons that a longtime homeowners might decide to stay put, from capital gains taxes to decades of memories.
But others like the idea.
“This is a big deal to me,” wrote Larry Davick, of Fremont. “I’m now 57 and would like to relocate but the artificial imbalance that the original Prop. 13 created has locked us into our empty nest. We are in the Parkmont neighborhood of Fremont and no longer need the services of the very good schools. A young family could benefit from living here, and of course, would pay higher taxes.”
Real estate agents stand to gain from the increased sales and commissions stimulated by such an initiative, but that is not the motivation behind it, wrote San Jose real estate agent Melinda Gedryn. The initiative is not “about agents making commissions or a scheme to help the rich,” she said, but about looking out for older Californians.
“A great many people who bought their homes years ago are now on fixed incomes, they are house rich and cash poor,” Gedryn wrote. “Sure, they may have a large amount of equity in their homes, a large chunk of which would be subject to capital gains tax. The money left over could very well fund their long term care needed in the future or the cost of living increases we experience every year.”
Others, including the realtors association, challenged the math behind the estimated loss of tax revenue derived by the Legislative Analyst’s Office, arguing that it doesn’t take into account the full picture. How could the losses be that large, they ask, if some homes are being reassessed and taxed at their market value for the first time in decades?
Brian Uhler of the Legislative Analyst’s Office explained that each year, a number of homeowners over 55 move to new homes anyway — in spite of the steep increase in property taxes. But no Californian over 55 would pay taxes on their new home’s market value if the initiative passes, he said, creating a loss for the state.
John Williams, of Moraga, said he expects the change would actually benefit school districts like the one his children attend — and certain cities — if it leads to more home sales in the area. “I’d probably still vote for this initiative even though I’m not 55,” said Williams. “We should have people who want to move within California be able to move.”
Others took issue with the fact that the benefit would apply to any homeowner over 55, no matter how wealthy or how many times they have moved within the state.
“Their reward is to cash out now and live happily the next 20 years in Arizona!” one reader posted on Facebook. “No more tax breaks.”
Some argued that now is the time to change a more controversial aspect of Proposition 13 that was not mentioned in the story — its tax benefits for commercial properties.
“Big business and apartment owners have profited handsomely, while in my opinion the public has been misled,” wrote Barry Hamley, of San Jose. “Although I benefit considerably (from Prop. 13), it just seems unfair to new home buyers. I think it should be modified to exclude commercial and rental properties.”
Lastly, Steve Wagner, who left California for northwest Arizona after 43 years, weighed in with some retirement advice: Skip the California property taxes altogether. Just over the border, he said, is Kingman, Arizona, population 30,000, where you will find beautiful weather, mountain views, low taxes and affordable homes.
“Instead of changing Prop. 13,” he wrote, “maybe all that is needed to get some of these folks to consider selling their homes is to tell them about Kingman, Arizona, or about other alternatives that they never would think of on their own.”Read at Original Source