New Property Tax Portability Initiative

Contributed by Michael Edlen, Real Estate Consultant

Those propositions were enacted to encourage people age 55 or older to “move down” to a smaller home, and be able to continue paying approximately the same amount of annual property taxes as before. Proposition 60 originally required that the replacement and the original be located in the same county, and 90 was passed to enable other counties to opt-in if they elected to. The tax relief is not automatic but must be requested within three years of the replacement property purchase.

There are some eligibility requirements and the replacement property must be of equal or lesser value than the original property. If the replacement property is purchased within the first year after an original property is sold, it may be up to 105 percent or less of the market value of the sold property. It can be up to 110 percent or less of the market value if a replacement home is bought within the second year after the original home is sold. Also, the propositions stipulate that this is a one-time-only filing. The tax relief cannot be granted if the claimant or spouse was granted relief in the past.

As of this year, 11 of the state’s 58 counties have opted in to enable a transfer of property tax base to their county. These are Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura, San Mateo, Santa Clara, Alameda, El Dorado, and Tuolumne. People are highly advised to verify tax transferability with the county they are considering before starting the process of moving. A new initiative is likely to be on the ballot next year to further expand the portability of property taxes.

The reason for this is that many thousands of senior homeowners have been increasingly limited by the requirements of Propositions 60 and 90, which has resulted in many people feeling forced to continue living in homes that are no longer suitable for them. This, in turn, has added to the state’s current housing shortage for younger families seeking larger homes.

We as Realtors are each contributing to fund this new initiative on the ballot. Every effort will be made to encourage and free more senior owners to move if they choose to do so, even if they have already once had the tax relief as provided for by the current propositions in effect.

As I understand the intention of the broadening or expansion of Prop 60 and 90, the main features of the new initiative will be:

All 58 California counties would be included, not just the current 11, so seniors would be able to move far more freely and take their current property tax base forward.
The carry-forward of the original property tax base will be able to be repeated over and over, so owners will not feel stuck in the property they may have moved to years ago.
They would be able to buy a replacement home that costs more than the one they are selling if they choose to, in which case their property tax will be a blend of the original tax base plus approximately 1.2% of the amount above that level that the new home is purchased for. Although there predictably may be some opposition to this new initiative, its benefits seem to far outweigh any drawbacks. Ultimately these broadened terms will help California homeowners of all ages, whether immediately or in the years to come. Hopefully, you will be glad to sign in favor of this being placed on the ballot next year. I think that the initiative will be in circulation between December 2017 and February 2018, perhaps for a few weeks.

On behalf of all generations of homeowners and those wishing to be homeowners, California Realtors encourage your support of this approach to aiding housing throughout California. Most likely there will be public meetings before year-end to discuss the issues, benefits, and any questions people may have.

Your attendance is encouraged. Michael Edlen has been one of the leading real estate agents in the Westside for nearly 30 years and is committed to helping seniors and other homeowners achieve their home desires in any way possible.

He can be reached at 310.230.7373 or [email protected].