San Diego 2-4 Unit Investors August Report 2024

PROP 13 is on the CHOPPING BLOCK…again

For the last 46 years, Prop 13 has been in place here in California. Limiting property tax hikes on homeowners. Since 1978 property owners have had a sense of security. Knowing that their annual property tax was at a set rate.  Prop 13 applies to all taxable property, including residential and commercial properties.

Prop 13 Basics:

Prop 13 limits property tax rates to 1% of the property’s assessed value. There is a provision that caps any annual increases in assessed value. That cap is to be limited to 2%. Or the rate of inflation, whichever is lower. Properties are reassessed at market value when sold or new construction occurs. Prop 13 applies to both residential and commercial properties.

Proposition 13 was a response to rapidly rising property taxes in the 1970s. Many homeowners, especially those on fixed incomes, struggled to keep up with tax bills that seemed to increase unpredictably each year. The measure aimed to provide stability and predictability in property taxation.

Other parts of the country do not have that same stability. Their annual property tax bills are unpredictable. Fluctuating year after year. Prop 13 is what property owners across the State of California have relied on for their entire length of ownership. A reasonable and reliable yearly tax bill. One that is not based on current property values. Instead based on the purchase price of the property.

For the last nearly half-century California’s tax and spend politicians have been unsuccessful in trying to do away with this iconic proposition. And this year is no exception.

To quote my Dad.”The state is broke! And just watch. They’re going to do away with Prop 13. To help make up the deficit.” He’s right you know. Here’s California’s budget situation — which fell from a $100 billion surplus in 2022 to a deficit as of -$73 billion this year — as evidence that state lawmakers are spending too much.

Trickery and wordplay on ballot measures are not new tactics. This year’s Prop 5 measure is no different. Prop 5 lowers the public vote threshold for approving ad valorem tax hikes from two-thirds currently required to just 55%.  Prop 5 would make it easier to raise taxes. And this is the exact loophole those persistent tax and spend politicians would love to have happen.

By putting a deceptive title on Prop 5 of: ‘California Proposition 5, Lower Supermajority Requirement to 55% for Local Bond Measures to Fund Housing and Public Infrastructure Amendment.’  They are attempting to trick taxpayers into passing a tax hike measure.

You think you’re helping to fund housing and public infrastructure. Which California desperately needs. But, here’s the California Taxpayer Association agreement against the Proposition: “More than four decades ago, prompted by years of rising taxes, Californians resoundingly approved Proposition 13 to provide a check on local government’s taxing authority, and to ensure a greater representative voice for those who would be taxed. Proposition 13 also limits taxes on property to 1 percent of the property’s assessed value. Reducing the vote threshold would diminish the people’s voice on tax increases and would erode property tax safeguards.”

And they are not the only ones opposing the Proposition. The California Association of Realtors contributed $27M for opposition to the ballot measure. Because they know it will undermine Proposition 13 by making it easier for local governments to increase property taxes by reducing the vote threshold on taxes that are currently subject to a two-thirds vote.

We’ve already have seen droves of Californians leave the state. Successful property owners who have spent a lifetime here. Raising their families, working their way up the ladder. All the while paying their fair share of taxes. If politicians are successful with doing away with Prop 13… Well, that mass exodus of people we’ve seen and heard about may turn into a stampede! For many more Californian families, who have stuck it out, the abolishment of Prop 13 may just be the straw that breaks the their backs.

Do yourself and your family a HUGE favor this November. Research and read the propositions carefully. Don’t be complacent and more importantly don’t get fooled into voting for something you don’t support.