The California Property Tax Transfers and Exemptions Initiative has been placed on the 2020 ballot in November. It is touted as being a “win-win” for both REALTOR®s
and customers, but are these claims justified and will it pass?
The short answer is absolutely.
The Property Tax Transfers and Exemptions Initiative(PTTE) 2020 is much the same as the 2018 Property Tax Fairness Initiative that failed to pass, but it is reenvisioned, reinvigorated and reborn. This new Initiative will directly address the ills of the California state budget deficit which is in excess of thirty-five million dollars by generating hundreds of millions for the state budget. The revenue will go to areas of critical importance to Californians such as healthcare during the times of COVID-19 and education. In addition it will give relief and aid to vulnerable groups of citizens such as our elderly population and victims of wildfires. This includes crucial protection to generational transfers. Furthermore the Initiative will significantly expand the housing supply, increase development opportunities in our state and boost the California housing market.
A brief history is required to explain how the 2020 Initiative will have these effects.
The PTTE of 2020 is a response to the controversial Prop 13 which passed on June 6, 1978. Prop 13 changed the Constitution of California to cap the property tax paid on California homes to only 1% of the homes value in 1976 with only small increases of 2% each year due to inflation. These property taxes can only be unfrozen and reassessed when either the ownership of the property changes or work is done on the home. This means that if a property owner who was affected by Prop 13 in 1978 moves, then their home will see its property tax skyrocket. Prop 13 is disastrous to the well-being of Californians for several reasons:
- It sucks away millions of dollars in potential state revenue that could be used to the benefit of all Californians
- It forces elderly Californians to hold onto their homes for fear of having to pay thousands more in taxes if they move
- The housing market is shrunk considerably from the homes held by Californians who are afraid of paying extra property taxes
So exactly how does this 2020 Initiative combat Prop 13?
Primarily this Initiative allows elderly Californians and those who have homes affected by Prop 13 to transfer their property tax and move to a new home but without having their property tax reassessed. In essence it gives the green light for these vulnerable populations to seek new homes closer to family and closer to healthcare support without having to fear a giant increase in taxes. This will have the direct effect of seeing a mass exodus of elderly Californians from their old homes to more comfortable housing. In addition, the protection of generational transfer will be instrumental in allowing elderly Californians to rest assured that their property will be given to their descendants. However, every Californian stands to benefit from this movement, not just these vulnerable populations.
California legislators will see the state deficit corrected and will have millions more in revenue to run an effective and helpful government
REALTOR®s will see the housing market swell as homes are sold and property taxes are reassessed to their proper levels.
Everyday Californians: firefighters, teachers and police officers will see millions poured back into the State government and directly into the public services they rely upon, education, transportation, healthcare and more.
The campaign for the California Property Tax Transfers and Exemptions Initiative of 2020 is well-funded, researched and prepared for the road to November. Already polls show the CPTTE polling at over two-thirds of voters supporting the measure. REALTOR®s will be called upon due to their advanced and comprehensive knowledge of real estate to educate their peers and Californians about the benefits of voting YES on the California Property Tax Transfers and Exemptions Initiative of 2020.
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