In California, the number of homes available for sale remains significantly lower compared to historical data. Some communities like Palo Alto have been especially impacted; going back 15 years, based on Multiple Listing Service data, 625 single family homes sold in 2002, compared to 356 in 2017, representing a 43% decline! One of the reasons that inventory is low is that long-term homeowners in communities where property values have risen dramatically benefit from the property tax limitations imposed by Proposition 13. The California Association of Realtors (CAR) estimates that nearly three-quarters of homeowners age 55+ have not moved since the year 2000.
Under current property tax policy qualified seniors may transfer their property tax basis to a new property if it is eligible within their same county or to counties that have chosen to participate. Currently there are only 11 counties out of a total of 58 that extend this benefit to seniors. Bay Area counties that participate in the program include Alameda, San Mateo and Santa Clara.
The California Association of Realtors (CAR) is gathering signatures to support a property tax portability initiative for the November 2018 ballot which will allow senior homeowners (55 years of age and older), victims of natural disaster and the disabled to keep all or most of their Proposition 13 property tax savings when they move. The portability initiative would allow senior homeowners who are often on a fixed income and who fear being able to afford a property tax increase, to transfer their property tax base from their current residence to a replacement residence located anywhere in California. Under current law a qualified senior may only transfer their current property tax once. The Portability Initiative would allow unlimited transfers.
If approved by the voters, the portability measure will let thousands of seniors, currently “locked into” their homes by low property tax rates purchase a home that will better suit their needs while expanding the housing inventory for younger buyers who wish to purchase.
The required number of signatures to place the portability initiative on the ballot is just under 600,000 and as of the first week of January about 25% of that number had been obtained. Signatures need to be submitted prior to February 28th.
This is a topic that will likely receive a lot of press in 2018, and we will continue to keep you updated through our blog.
For more information about Property Tax Transfer in California please refer to Transferring your Property Tax Base to a Different County and Transferring your Property Tax Base to a Different County – Part 2.