Is Prop 13 hurting current home sales in La Mesa and Beyond?
On Friday March 24th, I had the privilege to be invited to attend a “Politics and Pancakes” breakfast sponsored by the San Diego Association of Realtors (SDAR). The politics were interesting and the pancakes were great!
The featured speakers were Santee City Council Member Brian Jones (a last-minute replacement for Congresswoman Susan Davis who stayed in Washington D.C. to vote on the healthcare issue) and Dan McAllister the San Diego County Tax Collector. Also speaking was Bob Kevane the 2017 President of the San Diego Assn of Realtors (SDAR).
One of the first items discussed was Proposition 13 that was voted into law on June 6, 1978 and has remained relatively unchanged since. Talk of rewriting, modifying, updating this popular Proposition has come up often the last few years as the state searches for ways to increase revenue. Many believe that in its current state Proposition 13 is hurting current home sales throughout the state.
Here is a brief back ground, but if you would like to read more on the specifics go here. Under Prop 13 property taxes were rolled back and frozen at 1976 assessed value levels. Increases in the property taxes were also limited to 2% per year if the property was not sold. Once sold, the property was reassessed at 1% of the sale price and then future years were capped at 2% for future years.
As you can see, this would cause potential home sellers to think twice before selling their home and then moving to another home where the tax basis will be calculated on todays’ prices.
Here is an example:
Average home price in 1976: $45,300
Annual 1% Prop 13 tax = $ 453
Yearly increase cap of 2% = $ 9.06
Approx. total annual property tax of this home in 2017? $ 1040.65
Monthly = $86.72
2017 average home price (as of 2/2017): $ 624,731
Annual 1% Prop 13 tax = $ 6,247.31
Monthly = $520.60
Obviously, this is something that every home seller will take into consideration when contemplating selling their home. Therefore, the talk of the day was – Is Prop 13 hurting current home sales in La Mesa and beyond?
There is a one-time transfer of the tax base to a new home if you are over 55 years old. Click here for more information on Proposition 60 and Proposition 90.
The San Diego County Treasurer-Tax Collector Dan McAllister spoke of his latest project: Online Auctions for the sale of properties being sold for the failure to pay taxes. The live bidding auctions will end in May and unpaid property taxes will be put on a website and sold to the highest bidder.
As people have become increasingly comfortable with e-commerce this is another step to complete more of the tax collectors’ obligation online. McAllister said that this switch should help the county sell more properties for more money.
The first online auction on May 5th will feature some 400 undeveloped and developed real estate parcels as well as 1,200 timeshares. These properties have not had the taxes paid for at least 5 years. The proceeds of the sales after the back taxes and fees are deducted will be returned to the previous owner.
Click to see the current list of properties and to register for the auction. This online tax auction will be easier, faster & open to bidders worldwide. We will keep an eye on this and report back after the auction on May 5th.
So . . . what do you think? Is Prop 13 hurting current home sales in La Mesa and Beyond?