California voters have narrowly passed Prop 19, a measure expanding property tax breaks for older homeowners, closing tax loopholes on inherited properties and creating a new firefighting fund.
Supporters say the law will encourage empty-nesters to downsize, bringing homes to the market and easing the supply shortage in places like the Bay Area. The measure is similar to an ambitious expansion of Prop 13 brought by California Realtors that was broadly rejected by voters in 2018.
The Associated Press called the race Wednesday evening, with the measure garnering roughly 51 percent of the 15.4 million votes cast.
Jeanne Radsick, president of the California Association of Realtors (CAR), said the new law will give older homeowners a chance to downsize without getting hit with soaring tax bills. “It will allow them to move and be closer to their families,” she said.
The measure was fueled by the real estate industry, which benefits from a busy market. CAR spent $35.7 million on the campaign and the National Association of Realtors kicked in another $4.8 million, according to campaign finance reports. California Professional Firefighters also contributed $100,000.
The measure was supported by Gov. Gavin Newsom, the state Democratic Party, and a coalition of unions and nonprofits. It drew little organized opposition.
The real estate industry modified the 2018 ballot proposal this year, adding dedicated firefighting funds and closing off favorable state provisions which allowed families to inherit homes, rent them and keep low tax bills.
The new measure broadens the landmark Prop 13 provisions. Property taxes are based on the assessment of a home when it’s purchased. New homeowners typically pay dramatically more in taxes than their long-established neighbors.
Prop 19 allows most homeowners over the age of 55 to sell a house and preserve a lower tax assessment on the purchase of another property in California. The preferential tax treatment is also available to severely disabled residents and homeowners who have had their property ruined by a natural disaster or other catastrophe.
Older California homeowners now can only take their low tax assessment to their home county or 10 others, including Alameda, San Mateo and Santa Clara counties.
With home prices soaring to record levels, many agents say long-time homeowners feel locked into their properties and unable or unwilling to pay higher taxes on a new purchase.
Santa Clara agent Myron Von Raesfeld said he believes the measure could have a major impact on the Bay Area, bringing a new supply of homes to the tight market. Many of his clients are empty-nesters seeking to downsize, but can’t afford to move. “They don’t want to move into a condo and pay twice as much in property taxes,” Von Raesfeld said.
The Legislative Analyst’s Office estimates the measure initially could reap the state tens of millions of dollars a year by closing tax loopholes. Some of the new money will be earmarked for fire protection.
John Bagala, Marin Professional Firefighters local 1775 president, said it was an important victory. Firefighters have often depended on unpredictable state funding, and the measure will bring additional, dedicated money for personnel and resources.
Bagala and others expect state budget cuts will trim spending on firefighting — even as fire seasons grow longer and more violent. The additional funds will help.
The measure will also aid firefighters who have lost their homes in blazes. About 120 firefighters lost their houses to the Tubbs fire, even as they battled it, he said.
“This got real personal for us several years ago,” Bagala said, adding that he’s worried about fire seasons ahead. “I hate to say it, but it’s going to get worse before it gets better.”