Propositions [15], [19] and [21], which pertain to real estate in the state of California, will be on the November 3, 2020 ballot. I have provided some information on them below. Should you have any further questions on how they might impact you, please do not hesitate to reach out.
Proposition 15
California Proposition 15, the Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative, is on the ballot in California as an initiated constitutional amendment on November 3, 2020.
A “yes” vote supports this constitutional amendment to require commercial and industrial properties, except those zoned as commercial agriculture, to be taxed based on their market value, rather than their purchase price.
A “no” vote opposes this constitutional amendment, thus continuing to tax commercial and industrial properties based on a property’s purchase price, with annual increases equal to the rate of inflation or 2 percent, whichever is lower.
Overview
Proposition 15 would amend the California State Constitution to require commercial and industrial properties, except those zoned as commercial agriculture, to be taxed based on their market value. In California, the proposal to assess taxes on commercial and industrial properties at market value, while continuing to assess taxes on residential properties based on the purchase price, is known as split roll. The change from the purchase price to market value would be phased-in beginning in fiscal year 2022-2023. Properties, such as retail centers, whose occupants are 50 percent or more small businesses would be taxed based on market value beginning in fiscal year 2025-2026 (or at a later date that the legislature decides on). Proposition 15 would define small businesses as those that that are independently owned and operated, own California property, and have 50 or fewer employees.
The ballot initiative would make an exception for properties whose business owners have $3 million or less in holdings in California; these properties would continue to be taxed based on their purchase price. The ballot initiative would exempt a small business’s tangible personal property from taxes and $500,000 in value for a non-small business’s tangible personal property.
The state fiscal analyst estimated that, upon full implementation, the ballot initiative would generate between $8 billion and $12.5 billion in revenue per year.
Proposition 15 would make the California State Legislature responsible for passing laws for a phase-in of the market value-based tax on commercial and industrial properties, how often reassessments would occur (no less than three years between reassessments), and an appeals process for challenging reassessments
Proposition 19
California Proposition 19, the Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment, is on the ballot in California as a legislatively referred constitutional amendment on November 3, 2020.
A “yes” vote supports this constitutional amendment to:
-
- allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment;
- increase the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three;
- require that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred; and
- allocate additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.
A “no” vote opposes this constitutional amendment, therefore continuing to:
-
- allow eligible homeowners to transfer their tax assessments within counties and to homes of equal or lesser market value;
- keep the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments at one;
- allow the tax assessments on inherited homes, including those not used as principal residences, to be transferred from parent to child or grandparent to grandchild.
Overview
How would the ballot measure change the rules governing tax assessment transfers?
The ballot measure would change the rules for tax assessment transfers. In California, eligible homeowners can transfer their tax assessments to a different home of the same or lesser market value, which allows them to move without paying higher taxes. Homeowners who are eligible for tax assessment transfers are persons over 55 years old, persons with severe disabilities, and victims of natural disasters and hazardous waste contamination.
The ballot measure would allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment. The number of times that a tax assessment can be transferred would increase from one to three for persons over 55 years old or with severe disabilities (disaster and contamination victims would continue to be allowed one transfer).
How would the ballot measure affect inherited properties?
In California, parents or grandparents can transfer primary residential properties to their children or grandchildren without the property’s tax assessment resetting to market value. Other types of properties, such as vacation homes and business properties, can also be transferred from parent to child or grandparent to grandchild with the first $1 million exempt from re-assessment when transferred.
The ballot measure would eliminate the parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence, such as using a property a rental house or a second home. When the inherited property is used as the recipient’s principal residence but has a market value above $1 million, an upward adjustment in assessed value would occur. The ballot measure would also apply these rules to certain farms. Beginning on February 16, 2023, the taxable value of an inherited principal residential property would be adjusted each year at a rate equal to the change in the California House Price Index.
What would the ballot measure do with changes in revenue?
The ballot measure would create the California Fire Response Fund (CFRF) and County Revenue Protection Fund (CRPF). The ballot measure would require the California Director of Finance to calculate additional revenues and net savings resulting from the ballot measure. The California State Controller would be required to deposit 75 percent of the calculated revenue to the Fire Response Fund and 15 percent to the County Revenue Protection Fund. The County Revenue Protection Fund would be used to reimburse counties for revenue losses related to the measure’s property tax changes. The Fire Response Fund would be used to fund fire suppression staffing and full-time station-based personnel.
Proposition 21
California Proposition 21, the Local Rent Control Initiative, is on the ballot in California as an initiated state statute on November 3, 2020.
A “yes” vote supports this ballot initiative to allow local governments to enact rent control on housing that was first occupied over 15 years ago, with an exception for landlords who own no more than two homes with distinct titles or subdivided interests.
A “no” vote opposes this ballot initiative, thereby continuing to prohibit rent control on housing that was first occupied after February 1, 1995, and housing units with distinct titles, such as single-family homes.
Overview
What would the ballot measure change about rent control in California?
The ballot measure would replace the Costa-Hawkins Rental Housing Act (Costa-Hawkins), which was passed in 1995. Prior to the enactment of Costa-Hawkins, local governments were permitted to enact rent control, provided that landlords would receive just and reasonable returns on their rental properties. Costa-Hawkins continued to allow local governments to use rent control, except on (a) housing that was first occupied after February 1, 1995, and (b) housing units with distinct titles, such as condos, townhouses, and single-family homes.
The ballot measure would allow local governments to adopt rent control on housing units, except on (a) housing that was first occupied within the last 15 years and (b) units owned by natural persons who own no more than two housing units with separate titles, such as single-family homes, condos, and some duplexes, or subdivided interests, such as stock cooperatives and community apartment projects.
Under Costa-Hawkins, landlords are allowed to increase rent prices to market rates when a tenant moves out (a policy known as vacancy decontrol).[1] The ballot measure would require local governments that adopt rent control to allow landlords to increase rental rates by 15 percent during the first three years following a vacancy.
How does this ballot measure relate to California Proposition 10 (2018)?
In 2018, 59 percent of voters rejected Proposition 10, which would have allowed local governments to adopt rent control on any type of rental housing. The AIDS Healthcare Foundation (AHF) co-sponsored Proposition 10, and an AHF division called Housing Is A Human Right is sponsoring the campaign behind the 2020 ballot initiative. Rand Martin, a lobbyist for AHF, said, “The one lesson we learned from Proposition 10 is that the voters were not interested in a wholesale repeal of Costa Hawkins. But the other message we got in polling and focus groups is that people believe there are excesses to Costa Hawkins and there needs to be reforms.” Tom Bannon, CEO of the California Apartment Association, opposed Proposition 10 in 2018. He said, “Voters overwhelming rejected the measure the last time it was on the ballot. Once we educate voters about Weinstein’s latest housing-freeze measure, it’s bound to fail just as miserably as Prop. 10.”
Propositions 15, 19 and 21, which pertain to real estate in the state of California, will be on the November 3, 2020 ballot. I have provided some information on them below. Should you have any further questions on how they might impact you, please do not hesitate to reach out to me.
Proposition 15
California Proposition 15, the Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative, is on the ballot in California as an initiated constitutional amendment on November 3, 2020.
A “yes” vote supports this constitutional amendment to require commercial and industrial properties, except those zoned as commercial agriculture, to be taxed based on their market value, rather than their purchase price.
A “no” vote opposes this constitutional amendment, thus continuing to tax commercial and industrial properties based on a property’s purchase price, with annual increases equal to the rate of inflation or 2 percent, whichever is lower.
Overview
Proposition 15 would amend the California State Constitution to require commercial and industrial properties, except those zoned as commercial agriculture, to be taxed based on their market value. In California, the proposal to assess taxes on commercial and industrial properties at market value, while continuing to assess taxes on residential properties based on the purchase price, is known as split roll. The change from the purchase price to market value would be phased-in beginning in fiscal year 2022-2023. Properties, such as retail centers, whose occupants are 50 percent or more small businesses would be taxed based on market value beginning in fiscal year 2025-2026 (or at a later date that the legislature decides on). Proposition 15 would define small businesses as those that that are independently owned and operated, own California property, and have 50 or fewer employees.
The ballot initiative would make an exception for properties whose business owners have $3 million or less in holdings in California; these properties would continue to be taxed based on their purchase price. The ballot initiative would exempt a small business’s tangible personal property from taxes and $500,000 in value for a non-small business’s tangible personal property.
The state fiscal analyst estimated that, upon full implementation, the ballot initiative would generate between $8 billion and $12.5 billion in revenue per year.
Proposition 15 would make the California State Legislature responsible for passing laws for a phase-in of the market value-based tax on commercial and industrial properties, how often reassessments would occur (no less than three years between reassessments), and an appeals process for challenging reassessments
Proposition 19
California Proposition 19, the Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment, is on the ballot in California as a legislatively referred constitutional amendment on November 3, 2020.
A “yes” vote supports this constitutional amendment to:
-
- allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment;
- increase the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three;
- require that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred; and
- allocate additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.
A “no” vote opposes this constitutional amendment, therefore continuing to:
-
- allow eligible homeowners to transfer their tax assessments within counties and to homes of equal or lesser market value;
- keep the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments at one;
- allow the tax assessments on inherited homes, including those not used as principal residences, to be transferred from parent to child or grandparent to grandchild.
Overview
How would the ballot measure change the rules governing tax assessment transfers?
The ballot measure would change the rules for tax assessment transfers. In California, eligible homeowners can transfer their tax assessments to a different home of the same or lesser market value, which allows them to move without paying higher taxes. Homeowners who are eligible for tax assessment transfers are persons over 55 years old, persons with severe disabilities, and victims of natural disasters and hazardous waste contamination.
The ballot measure would allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment. The number of times that a tax assessment can be transferred would increase from one to three for persons over 55 years old or with severe disabilities (disaster and contamination victims would continue to be allowed one transfer).
How would the ballot measure affect inherited properties?
In California, parents or grandparents can transfer primary residential properties to their children or grandchildren without the property’s tax assessment resetting to market value. Other types of properties, such as vacation homes and business properties, can also be transferred from parent to child or grandparent to grandchild with the first $1 million exempt from re-assessment when transferred.
The ballot measure would eliminate the parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence, such as using a property a rental house or a second home. When the inherited property is used as the recipient’s principal residence but has a market value above $1 million, an upward adjustment in assessed value would occur. The ballot measure would also apply these rules to certain farms. Beginning on February 16, 2023, the taxable value of an inherited principal residential property would be adjusted each year at a rate equal to the change in the California House Price Index.
What would the ballot measure do with changes in revenue?
The ballot measure would create the California Fire Response Fund (CFRF) and County Revenue Protection Fund (CRPF). The ballot measure would require the California Director of Finance to calculate additional revenues and net savings resulting from the ballot measure. The California State Controller would be required to deposit 75 percent of the calculated revenue to the Fire Response Fund and 15 percent to the County Revenue Protection Fund. The County Revenue Protection Fund would be used to reimburse counties for revenue losses related to the measure’s property tax changes. The Fire Response Fund would be used to fund fire suppression staffing and full-time station-based personnel.
Proposition 21
California Proposition 21, the Local Rent Control Initiative, is on the ballot in California as an initiated state statute on November 3, 2020.
A “yes” vote supports this ballot initiative to allow local governments to enact rent control on housing that was first occupied over 15 years ago, with an exception for landlords who own no more than two homes with distinct titles or subdivided interests.
A “no” vote opposes this ballot initiative, thereby continuing to prohibit rent control on housing that was first occupied after February 1, 1995, and housing units with distinct titles, such as single-family homes.
Overview
What would the ballot measure change about rent control in California?
The ballot measure would replace the Costa-Hawkins Rental Housing Act (Costa-Hawkins), which was passed in 1995. Prior to the enactment of Costa-Hawkins, local governments were permitted to enact rent control, provided that landlords would receive just and reasonable returns on their rental properties. Costa-Hawkins continued to allow local governments to use rent control, except on (a) housing that was first occupied after February 1, 1995, and (b) housing units with distinct titles, such as condos, townhouses, and single-family homes.
The ballot measure would allow local governments to adopt rent control on housing units, except on (a) housing that was first occupied within the last 15 years and (b) units owned by natural persons who own no more than two housing units with separate titles, such as single-family homes, condos, and some duplexes, or subdivided interests, such as stock cooperatives and community apartment projects.
Under Costa-Hawkins, landlords are allowed to increase rent prices to market rates when a tenant moves out (a policy known as vacancy decontrol).[1] The ballot measure would require local governments that adopt rent control to allow landlords to increase rental rates by 15 percent during the first three years following a vacancy.
How does this ballot measure relate to California Proposition 10 (2018)?
In 2018, 59 percent of voters rejected Proposition 10, which would have allowed local governments to adopt rent control on any type of rental housing. The AIDS Healthcare Foundation (AHF) co-sponsored Proposition 10, and an AHF division called Housing Is A Human Right is sponsoring the campaign behind the 2020 ballot initiative. Rand Martin, a lobbyist for AHF, said, “The one lesson we learned from Proposition 10 is that the voters were not interested in a wholesale repeal of Costa Hawkins. But the other message we got in polling and focus groups is that people believe there are excesses to Costa Hawkins and there needs to be reforms.” Tom Bannon, CEO of the California Apartment Association, opposed Proposition 10 in 2018. He said, “Voters overwhelming rejected the measure the last time it was on the ballot. Once we educate voters about Weinstein’s latest housing-freeze measure, it’s bound to fail just as miserably as Prop. 10.”