San Diego Property Taxes and Prop 13 Confusion
San Diego Property Taxes and Prop 13 ConfusionFebruary 24th, 2020
Property Taxes and Prop 13 – March vs. November Ballot – What’s The Difference?
There are two major initiatives in 2020 regarding Proposition 13. There is a Prop 13 on the March 3 ballot and another initiative for the November 3 ballot.
Both affect property taxes but they are different and should not be confused.
What is Proposition 13?
Prop 13 is most well-known for keeping property taxes low on your home. This CA law was implemented in 1978 which limits property tax assessment increases to 2% per year.
Prop 13 – March 3 Ballot – Bonds for Schools
Prop 13 is on the March 3 ballot. This is NOT the same as the Proposition 13 passed in 1978. This Prop 13 is to authorize bonds for facility repair, construction and modernization at public schools.
One of the concerns is, school bonds could result in higher property taxes. This would affect both homeowners and renters. If you are a renter and property taxes go up, the landlord would likely increase the rents to help cover the cost.
Prop 13 – November 3 Ballot Initiative – Split Roll
On the other hand, there is an initiative for the November 2020 ballot to amend the 1978 Prop 13. This initiative is known as “split roll”. “Split roll” would split how taxes are calculated between residential and commercial properties.
In a nutshell, today, both residential and commercial properties are reassessed to full market value at the time of sale. Split roll would cause commercial properties to be reassessed at a more frequent interval, such as every 2 or 3 years.Since property values are increasing, if this were to pass, more property taxes could be collected on commercial properties.
Concern #1 – Property taxes for homeowners
Many people believe this is a stepping stone onto increasing property taxes in the residential market. Once commercial properties are assessed more frequently, they will want to do the same for residential properties, resulting in higher property taxes for homeowners.
Concern #2 – Increased costs for good and services
Another major concern is when businesses costs go up, that cost is generally passed on to the consumer. Imagine your local dry cleaner, nail salon or coffee shop. If their property taxes go up, they would not be able to absorb that cost and it would result in price increases on your goods and services.
There is confusion because both ballot initiatives have an impact on property taxes and reference Prop 13 but they are not the same. One is a bond for schools, the other is split roll (residential vs. commercial). If you would like to chat more about them and if/how these could potentially affect you, feel free to reach out any time.