As November 2024 approaches, California property owners are standing at a crossroads that could redefine the financial security they’ve long relied on. Proposition 13, the cornerstone of property tax stability, is facing may face potential changes under ACA-1 and ACA-13. These amendments could alter how your property is taxed, with significant implications for your wallet and home value. This election isn’t just another vote—it’s a pivotal moment that could reshape the future of property ownership in California. Are you ready to make an informed choice that protects your financial future?
Prop 13: The Foundation of California’s Property Tax System
Proposition 13, passed in 1978, is the rulebook for property taxes in California. Back in the day, property taxes were skyrocketing, pushing property owners to the brink. Prop 13 put a stop to that by capping property taxes at 1% of the property’s assessed value and limiting increases in assessed value to 2% per year—unless the property was sold.
For decades, this cap has been a godsend for property owners, especially those on fixed incomes. It’s allowed folks to stay in their homes despite rising property values. But as with all things, there’s a flip side. Critics argue that Prop 13 has starved local governments of the funds needed to keep schools, roads, and emergency services running smoothly. And with commercial properties, the tax benefits have been even more pronounced, sometimes leading to what many see as an unfair tax burden on newer property owners and businesses.
ACA-1 and ACA-13: What’s on the Table?
This year, ACA-1 and ACA-13 are up for a vote, and they’re poised to shake up the status quo. Here’s a closer look at what each amendment is all about.
ACA-1: Making It Easier to Fund Local Projects
ACA-1, or Assembly Constitutional Amendment 1, is designed to make it easier for local governments to raise money for infrastructure and affordable housing. That’s what the benefits are being touted to voters, However, ACA-1’s main goal is to wage “total war to repeal Prop 13.” Right now, Prop 13 requires a two-thirds majority vote to approve local tax increases for these projects. ACA-1 would lower that requirement to 55%, making it less of a Herculean task to get these projects funded.
Proponents say this change is necessary to fix crumbling infrastructure and address the housing crisis. After all, who wouldn’t want better roads and more affordable housing options? But there’s a catch. Lowering the voting threshold could mean more taxes down the line, which might hit property owners where it hurts—their wallets.
ACA-13: Reassessing the Reassessments
ACA-13, or Assembly Constitutional Amendment 13, takes aim at how often properties, especially commercial and industrial ones, are reassessed. Under Prop 13, properties are only reassessed when they’re sold. This means a business that’s owned its property for decades could be paying taxes based on a value that’s way below current market rates.
ACA-13 proposes more frequent reassessments for commercial properties to ensure that tax bills are more in line with current market values. The idea is to make sure everyone’s paying their fair share, but the impact on commercial real estate—and the ripple effects on businesses and consumers—could be significant.
The Potential Impact on Property Owners and the Real Estate Market
So, what do ACA-1 and ACA-13 mean for you, the California homeowner or real estate investor? Let’s break it down.
Higher Taxes Could Be on the Horizon
First and foremost, let’s talk about taxes. If ACA-1 passes, local governments will have an easier time raising taxes for infrastructure and housing projects. That’s great news if you’re tired of potholes and want more affordable housing options. But remember, those taxes have to come from somewhere—and that somewhere might be your property tax bill.
While ACA-13 could potentially target commercial properties, it could have indirect effects on property owners, too. If commercial property taxes go up, businesses might pass those costs on to consumers. That could mean higher prices for goods and services, which isn’t exactly welcome news when inflation is already a concern.
What About Property Values?
There’s also the question of how these amendments could impact property values. If ACA-1 leads to higher local taxes, it could make some areas less attractive to buyers, potentially slowing down property value appreciation. On the flip side, if ACA-13 leads to higher taxes on commercial properties, some businesses might reconsider their California operations, which could slow economic growth and indirectly affect the housing market.
The Broader Economic Picture
Let’s zoom out for a second. California’s economy is massive, and what happens here often sets trends for the rest of the country. ACA-1 and ACA-13 are part of a broader conversation about how to fund public services in a state where costs are high and the needs are even higher.
Supporters of these measures argue that they’re necessary to address longstanding inequities and underfunded public services. But critics worry about the economic impact, especially if businesses start pulling out of the state or passing higher costs onto consumers.
What’s at Stake in November
As you head to the polls in November, it’s important to understand what’s at stake. ACA-1 and ACA-13 aren’t just about numbers and percentages—they’re about the future of property ownership, economic stability, and the quality of life in California.
Making an Informed Decision
Take the time to consider how these amendments might affect you, your family, and your community. If you’re a homeowner, think about how changes to Prop 13 could impact your property taxes and home value. If you’re a real estate investor, consider how these measures might influence the market and your investments.
The Bottom Line
The 2024 election is more than just a chance to vote on a couple of amendments—it’s an opportunity to shape the future of California’s property tax system and, by extension, the future of our communities. Whether you’re in favor of ACA-1 and ACA-13 or against them, make sure you’re casting your vote with a full understanding of what’s on the line.
In the end, it’s your voice and your vote that will determine the direction we take. So, as you head to the polls this November, keep in mind that your decision will resonate far beyond the ballot box, influencing the future of property ownership and real estate in the Golden State for years to come.