California's homeowners are getting older. In recent years, this has contributed to declining property sales and depressed property tax growth. As California's homeowners continue to age, however, these patterns are likely to reverse. Home sales likely will pick up. This, in turn, should lead to faster property tax growth, especially in communities with more older homeowners and where past home price appreciation was highest. These potential future property tax gains could be lessened by an increase in transfers of homes from parents to children, which often are exempt from revaluations that trigger higher property tax payments. These parent-to-child exclusions have been a notable and consistent share of home transfers in recent years, currently reducing annual property tax revenues by around $1.5 billion statewide. This amount is likely to grow in the future as homeowners continue to age and look to transition their properties to their children.
To read our full post, including an interactive graphic, see here: http://www.lao.ca.gov/Publications/Report/3693
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