Sen. Beall Working On Measure To Help Seniors While Also Increasing Housing Supply


SACRAMENTO, Calif., Jan. 11, 2016 /PRNewswire-USNewswire/ -- Senate Bill 378 and Senate Constitutional Amendment 9, introduced by Sen. Jim Beall (D-San Jose), which would allow seniors to transfer their property tax basis to another home even if the home they purchase has a higher sale price than their original home will be heard by the Senate Governance and Finance Committee Wednesday, January 13, 2016.

Proposition 60 -- approved by the voters in 1986 -- allows homeowners over the age of 55 to transfer the base year assessed value of their principal residence to a replacement home in the same county.  For example, if a senior purchased their residence in 1985 for $100,000 and then sold the home for $200,000 in 2015, they can transfer the $100,000 base year assessed value and be taxed on that value instead of on the assessed value of the replacement home.

Generally speaking, under Proposition 13, property taxes are 1 percent of the base year value. In other words, in this example, the senior's annual property tax bill would be $1,000 instead of $2,000 -- a savings to the senior of $1,000 every year.  Proposition 90 -- approved by the voters in 1988 -- allows such transfers to a home located in a different county so long as that county has agreed to participate in the transfer program.

However, in both cases, the value of the replacement home must be equal to or less than the value of the original residence.  In the example above, if the value of the replacement home is greater than $200,000 -- by any amount -- then the base year assessed value cannot be transferred.

"This is a problem for many seniors seeking to downsize their 'empty nest' who over the years have had the housing market move away from them," Senator Beall said.  "Moving to a newer but smaller home likely means having to buy a home that costs more than the price their current residence can fetch."

SCA 9/SB 378 would, instead, allow a transfer to a replacement home with a value greater than that of the original residence.  However, so that the senior homeowner doesn't receive more of a property tax benefit than that to which they are entitled, the difference between the value of the replacement home and that of the original residence is added to the base year assessed value.

Returning to the example above, if a $210,000 replacement home is purchased, the $10,000 difference (between that purchase price and the sale price of the original home; $210,000 minus $200,000 = $10,000) would be added to the base year assessed value of $100,000 for a total of $110,000, which would be the amount the senior homeowner's property taxes would be based upon.

"It just doesn't make sense to deny this benefit to seniors who may be only $1 over the currently allowed amount," Senator Beall pointed out.  "Also, by helping seniors move out of homes that are currently too large for them we will be adding to the stock of affordable housing -- this will be a great help to families just starting out."

Since Propositions 60 and 90 amended the state constitution, to implement this needed change, the voters will need to approve SCA 9 if it is passed by the Legislation and placed on the November 2016 ballot.  SB 378 contains the statutory language needed to implement the amendment to the state constitution.

The Governance and Finance Committee is scheduled to meet 9:30 a.m., Wednesday, January 13, 2016, at Room 112 at the state Capitol.

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