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California Proposition 5: Property Tax Transfer Initiative

Flickr, TaxRebate.org.uk

Proposition 5 would amend the controversial 1978 law known as Proposition 13, which freezes property tax rates as homes appreciate over time.

The new proposition would allow homebuyers who are over 55 or severely disabled to transfer their tax assessments when they move homes — that means, instead of paying the higher tax rate that often comes with a new purchase, they’d keep paying taxes at the rate that was set when they purchased their last home. As long as the new home is of equal or less value.

The registered support for the measure comes from the National Association of Realtors and the California Realtors Association, who’ve raised 7 million dollars so far. The realtors argue that this change would encourage home sales and free up properties. They say often times, older homeowners would like to downsize but because new homes have such greater tax rates, it makes more financial sense to stay put in their bigger home. This contributes to the shortage of options for new homebuyers.


The opposition campaign has raised over a million dollars, and the California Teachers Association, labor groups, and housing rights advocacy groups oppose it. They say local schools and public services can’t afford to lose any more tax revenue. The nonpartisan Legislative Analyst’s Office has estimated the change would eventually rise to cost local governments and schools $2 billion dollars annually over time. Many of these groups instead support a measure on the 2020 ballot which would shrink Proposition 13 instead of expanding it, by exempting commercial properties from the law’s protections.


So, if you want to incentivize home sales by allowing people who are over 55 or severely disabled to carry their old property tax rates over to new homes, vote YES on Proposition 5. If you don’t want to expand tax cuts for homeowners, vote NO.