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  Do You Support Proposition 5 - Transfer Property Tax Base?

Prop. 5 allows those 55 and older to transfer their property tax base to any home they purchase in the State of California.

Today only less expensive homes allow Prop. 13 tax base to transfer to a new property. And if buying a property in a different county, only 11 counties allow Prop. 13 tax base to transfer to the new property.

But under Prop 5, if a couple's current home has a taxable value of $200K with a market value of $600K, and they purchase a more expensive home for $700K in any county, Prop. 5 allows the new home's tax base to be $300K instead of $700K.

Here is the math.

The prior home taxable value ($200K) is added to the difference of the new home market value ($700K) minus the market value of their old home ($600K).

$200K + ($700K - $600K) = $300K

The property tax on their new home is based on $300K * 1.1% = $3,300 per year instead of $700K * 1.1% = $7,700 per year. This is a savings of $4,400 for the first year.

If the couple buys a less expensive home, older home buyers still benefit. Say the new home costs $450K, the new home taxable value would be $150K.

$200K x ($450K / $600K) = $150K

Their property tax will only be $1,650. Compare this to $4,950 tax based on $450K market value or $2,200 based on their current Prop. 13 tax base of $200K.

Prop. 5 allows couples in high demand areas like Los Angeles and San Francisco to move to less expensive areas and still not lose their tax base. Over half of all owner occupied homes in California are owned by those 55 and older. Real estate agents would benefit if Prop. 5 passes.

We support Proposition 5!

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