What You Need to Know About the Proposed Tax Increases

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With so much focus on the presidential election this November, it’s easy to overlook some of the proposed state and local measures on the ballot that can affect homeowners in Southern California. Today I’d like to take an opportunity to discuss some of those with you so that you’ll be well-informed when it comes time to vote.

One of the proposed tax increases is coming from a Los Angeles city bond which will pay for housing for the homeless. If it passes, the city will be authorized to take out a $1.2 billion bond, which they will pay for by adding a new tax to property tax bills.

The city claims that the bond money couldn’t be used to pay for supportive services like mental health and substance abuse treatment, but only to buy land and housing. This would mean that the city would be allowed to use its powers of eminent domain to acquire land throughout Los Angeles. At that point, the land could be leased at a low cost to developers who win the contracts to build homeless housing.

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These tax hikes require the approval of two-thirds of the voters.

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The way this would work is that property owners would pay between $4.50 and $17.50 per year for every $100,000 of assessed value for up to 28 years in order to pay off the $1.2 billion homeless housing bond.

In addition, the Los Angeles County Community College District is seeking voter approval for a $3.3 billion facility bond, which would be paid for with another property tax as well.

Los Angeles County also wants voters to pay for parks with a parcel tax of 1.5 cents for every square foot of buildings on a property. This works out to about $22.50 per year for a 1,500 square foot building. This parks tax would affect businesses, too. Large commercial properties like warehouses and retailers would be hit with sharp tax increases, which will either be passed onto their customers with higher prices, or be absorbed as damage to their bottom line.

Luckily, because of Prop 13, initiated back in 1978 when the Tax Revolt Initiative was passed, the upside is that all of these proposed tax hikes require the approval of two-thirds of the voters in order to actually become law.

There is a lot to consider for November, not only with regard to the presidential election, but as far as local measures are concerned as well.

If you’d like more information about any of the proposed tax measures that we discussed today, or if you have any questions about real estate, feel free to reach out to us. Looking forward to your call!