OAKLAND, Calif. (KTVU) - This November, California voters are set to decide on Proposition 5, a housing initiative that offers property tax breaks to homebuyers 55 and older. The measure is an amendment to Proposition 13, which currently caps property taxes at 1% of the home's purchase price, adjusted up to 2% each year for inflation. "What that means is homeowners, especially those who bought their homes decades ago, are paying a lower property tax rate compared to newer homeowners who just bought their homes," said Yvonne Leow, co-founder of the non-partisan By the Bay voter guide.
If passed, Proposition 5 would remove restrictions and allow Californians 55 and older, or those who are severely disabled, pay discounted property taxes to move into a new home anywhere in California. The measure was introduced by the California Association of Realtors, which claims Proposition 5 removes an "unfair moving penalty" for seniors and makes way for young families struggling to find housing.
"The challenge with these statements is it's really hard to actually validate with evidence because it's hypothetical'" Leow said. "They're presuming young families will be moving into these new homes. It's not necessarily true."
Critics say Proposition 5 falls short of solving the state's housing shortage, and instead reduces property tax revenue, which is mostly used to fund public education. Leow says that claim is true. "It'll end up costing state and local government a lot of money for all that lost tax revenue.
The Legislative Analyst's Office says the revenue loss from Proposition 5 would be bigger than the gains from higher home prices, because it would give tax breaks to people who would have moved anyway. The LAO says right now, 85,000 homeowners aged 55 and older move to different homes and pay higher property taxes every year.