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Proposition 5: Voters won’t expand property tax savings for older homeowners

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The measure would have allowed some homeowners to take low property taxes with them when moving

House in the Valley
With most ballots counted, the measure is well below the 50 percent threshold needed to pass.
Photo by Liz Kuball

With the defeat of Proposition 5, California voters have decided not to give older homeowners more breaks on their property taxes.

With 97 percent of state precincts reporting statewide, the measure has garnered less than 42 percent of the vote.

“We are disappointed in the election outcome,” said California Association of Realtors president Jared Martin in a statement.

“But we remain committed to helping seniors, disabled homeowners and those impacted by California’s natural disasters to not be subject to a punitive property tax increase when moving to a safer, more practical home,” he said.

The real estate trade group sponsored the measure and led the campaign for its passage. If approved, the initiative would have expanded on property tax savings under Proposition 13, which California voters approved in 1978.

Proposition 13 limits property tax rates to 1 percent of a property’s assessed value, and until that property changes hands, the value can only go up 2 percent each year. That means that the longer California residents have owned their homes, the lower their property tax payments tend to be.

Under current law, homeowners who are over the age of 55, disabled, or who live in an area impacted by a natural disaster can already transfer their property tax payments with them when buying a new home. But they can only do this once, and in most parts of the state, they’ll have to buy in the same county.

Proposition 5 would have eliminated the one-time requirement and allowed qualifying homeowners to search for a new property in any part of the state. It would also have allowed those homeowners to bring lower property taxes to a home worth more than the one they moved from, which is also off-limits under existing law.

Supporters of the measure argued that removing these restrictions would encourage qualifying homeowners to sell their homes, freeing up more housing in competitive real estate markets like Los Angeles.

But a report from the state Legislative Analyst’s Office suggested that the measure could actually drive up the cost of housing, while reducing tax revenue for local governments and school districts.

That led many housing advocacy groups and labor unions to oppose the measure.

Martin says that CAR plans to advocate for a similar proposal in the state legislature and could present voters with a “revised initiative” in 2020.