WALNUT CREEK (KPIX 5) — Proponents of Proposition 19 on the November ballot say it would raise much-needed money for fighting wildfires and provide help to wildfire victims. But others say it’s a thinly-disguised attack on Prop 13 tax protections.
Right now, long-time homeowners pay lower taxes because of Prop 13. Those over 55 can keep that low rate when they move, but only once in their lives and it generally has to be within the same county. Prop 19 would allow seniors to move anywhere in the state three times in their lives and still maintain their low tax base.READ MORE: Surveillance Video, Protein Bar May Be Key In Lafayette Theft Of FBI Agent's Gun, Badge
“I think that makes a lot of sense but, don’t mistake, there’s going to be a billion-dollar tax increase on long-time California residents that would pay for this,” said Scott Horton of JP King investment advisors in Walnut Creek.
He said the other side of Prop 19 will have a huge effect on those who might inherit a parent’s property. Currently, children can inherit a house, of any value, from a parent and keep the lower tax rate. But Prop 19 would limit that home value to one million dollars and require that the child live in the house as a primary residence. If they don’t live in the house and rent it out, they will pay the higher market value tax rate.
Real estate attorney Yin Ho says all of this would be an incentive to increase home sales, which may be why the California Association of Realtors is pushing the proposition.
“You won’t have seniors who feel like they’re handcuffed and can’t leave,” Ho said, “and it’ll force, I guess, force children to sell properties that they could otherwise inherit without much of a tax burden.”READ MORE: COVID Schools: San Jose Mayor Joins Parents Calling For Speedup In Reopening Classrooms
A similar proposition, allowing seniors to move with their tax base anywhere in the state, was soundly defeated two years ago. So what does this latest proposition have to do with wildfire? Lawmakers added a tax benefit to those who lose homes in fires and have earmarked some of the money for firefighting as a way to make the proposition more popular.
So is the wildfire element just a smokescreen?
“Of course it is, of course it is. That was just added a couple months ago to the ballot,” said Horton. “This is a tax increase, no question about it, to the tune of a billion dollars a year.”
Proponents say Prop 19 will raise funds for firefighting and make it easier for seniors to move wherever they want. Opponents see it as a tax grab on inheritance and an assault on the intention of Prop 13. Traditionally, that’s been a pretty tough sell to voters.
“I just think anytime you hear Prop 13 being under attack, voters, in their minds, just turn it off and say no,” said Ho.MORE NEWS: VIDEO: Woman Dragged By Car In Oakland After Having Purse Snatched