California REALTORS® Face Assessment To Fund Ballot Initiative

Written by Posted On Monday, 23 October 2017 09:33

Recently the directors of the California Association of REALTORS® (CAR) voted to place a $100 assessment on each of the association's approximately 180,000 members. This vote took place at the director's annual fall meetings, held this year in San Diego, October 11 -- 14. The purpose of the assessment is to help fund a CAR-sponsored ballot initiative to be placed on the November, 2018 California ballot.

The initiative, if passed, would allow "individuals 55 years of age and older to transfer their property tax basis to any home in the state, to purchase any price home, and to transfer their basis as many times as they wish."

To appreciate the significance of this, it is necessary to have some idea of California's property tax system. Property tax valuations are based on purchase price. You buy a house for $700,000, the assessor will value it at $700,000. After that, increases in property tax value are severely limited by formula. A home that was purchased for $500,000 five years ago could still be valued, for tax purposes, in the $500,000 range, even if its actual market value had increased to $700,000.

If you have lived in the same home for 15 -- 20 years or more, you are probably enjoying relatively low property taxes because they are based on your low tax valuation. When contemplating a move, one of the things you have to think about is what your new property taxes might be, as they will be based on the purchase price of your new home. The effect of this has been to discourage people from moving down, e.g. from the 4-bedroom family home to a new 2-bedroom in a senior community, because the latter might result in significantly higher property taxes.

Californians sought to solve this problem in 1986 with the passage of Proposition 60. It allowed seniors to keep their property tax base assessment when they moved within the same county. However, in 1988, Proposition 90 was passed which allowed each individual county the option of participating in this tax base transfer by seniors who move from one county to another. This had great significance, because many retirees move to a different county (e.g. in the mountains, or desert) than the ones in which they had lived.

Only eleven of California's 58 counties will allow a senior from another county to transfer his or her old property tax base to a newly-acquired home in that county.

California's housing market is currently hampered by a lack of inventory. One of the causes is said to be the "log jam" created by the situation outlined above. It is claimed that large numbers of seniors are reluctant to sell their long-time family home, because they don't want to incur the higher property taxes that will come with the purchase of a replacement home. The ballot proposition sought by CAR is intended to fix that. According to the Legislative Analyst's Office, "almost 43,000 additional transactions will occur annually."

Could a $100-per-member assessment result in such a beneficial effect? Hardly. That money just gets things started. According to background material supplied to the CAR directors, the assessment would only provide part of the funds needed. "The cost to circulate the initiative for signature gathering is $3 million, with the cost of the subsequent campaign ranging between $30 million and perhaps upward of $50 million, if the initiative is heavily contested. Funding would come from C.A.R. political action committees, reserves, NAR funds and a C.A.R. member assessment [i.e. the one now being discussed]."

Strong opposition to the ballot is expected. It would not be surprising if a supplementary assessment became necessary. And, of course, no matter how much funding is achieved, the voters could always reject it.

Bob Hunt is a director of the California Association of Realtors®. He is the author of Real Estate the Ethical Way. His email address is This email address is being protected from spambots. You need JavaScript enabled to view it..

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Bob Hunt

Bob Hunt is a former director of the National Association of Realtors and is author of Ethics at Work and Real Estate the Ethical Way. A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at [email protected].

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