How does the upcoming 2018 California Election effect homeowners?
As a local Orange County residential realtor - I want to share about two propositions that impact local homeowners.
The California Association of Realtors has taken a position on two critical measures on your ballot.
So, what are the two propositions that could impact homeowners in CA?
1. Proposition 5 - C.A.R. sponsored Proposition 5 (The Property Tax Fairness Initiative) eliminates the property tax "moving penalty" and allows homeowners over age 55, the severely disabled and families whose homes have been destroyed in a natural disaster to maintain the Proposition 13 taxpayer protections when they move. Currently, Propositions 60 and 90 preserve Prop. 13 benefits those over age 55 by allowing a once in a lifetime transfer of of property tax basis to a property of equal or lesser value, within Orange County or with cooperating counties in CA. If Prop. 5 passes, seniors (over 55) and disabled homeowners could transfer their assessed value to a replacement home in ANY California county AN UNLIMITED number of times. They could ALSO transfer it to a more expensive home, although the difference in price between their old and new homes would be added to their assessed value. If they bought a less expensive home, their property taxes would actually drop. Suppose their existing home is assessed at $500,000, they sell it for $1 million and buy a new one for $800,000. Because the old home’s assessment was half its market value, the new home would be assessed at only $400,000, or half its market value. That $100,000 drop in assessed value wouldn’t happen today. Prop. 5 would extend these benefits to people who lose their homes in a governor-declared disaster and buy or rebuild elsewhere. These owners are already entitled to other types of property tax relief, which generally would be replaced by Prop. 5, according to the California Board of Equalization. I have had this discussion with many homeowners who feel they are held hostage in their home of many years and are reluctant to sell and buy another because they cannot afford higher property taxes in order to downsize. This proposition could have benefit many homeowners that want to downsize and add housing supply that will trickle down to first time home buyers in a state that is facing a housing shortage.
2. Proposition 10 - Repeal of C.A.R's Costa- Hawkins Rental Housing Act. Proposition 10 could make California's housing crisis even worse by rolling back important protections that have been in effect for more than 20 years. Prop. 10 would repeal the 1995 Costa-Hawkins Rental Housing Act, which protects properties built that year or later from rent control. The law also prevents cities with preexisting rent control laws from extending them to newer units. And Costa-Hawkins exempts single-family homes from rent control while guaranteeing property owners the right to raise rents to market value when units are vacated. Without those protections that are in place today, unelected bureaucrats could dictate how much homeowners can charge to rent out their home or even a single room in that home. Property rights protections are destroyed as these bureaucrats can impose steep penalties for landlords who to move into their property themselves.
I am not advising anyone how to vote but on these propositions but do your homework on these important propositions prior to election day.
I am here to help with your real estate needs but please consult you your tax advisor for tax advice and your legal advisor for legal advice.