November 2022 Ballot Update: Empty Homes Tax Moves Forward in San Francisco; Prop 19 Repeal Falters

A ballot measure to tax vacant apartments in San Francisco – the “Empty Homes Tax” – acquired enough signatures to be certified for the November 2022 ballot.  If passed, the measure would take effect in 2024 and would apply to residential buildings with three or more units.  In the first year, any unit that sits vacant for more than six months would be subject to a tax of $2,500 to $5,000, depending on square footage.  If the unit remains vacant in subsequent years, the tax would double in 2025 and double again in 2026 and would be adjusted for inflation.  Supporters argue the measure would encourage vacant units to be leased or sold amid a housing shortage.

Meanwhile, the Howard Jarvis Taxpayers Association failed to collect enough signatures for a ballot measure that would have repealed the changes to the parent-child reassessment exclusion for property tax purposes under Prop 19.  Before Prop 19, certain transfers of California real property between parent and child could be excluded from reassessment.  Prop 19, which passed on the November 2020 ballot, sharply limited the exclusion to principal residences up to $1 million and family farms, provided the property continued to serve as the principal residence or family farm of a transferee.  The measure would have restored the exclusion of the principal residence of any value and introduced a $2.4 million exclusion, plus inflation adjustments, of all other property. Because Prop 19 passed by ballot measure, it would take another ballot measure to repeal or amend it.

If you have questions about San Francisco’s proposed Empty Homes Tax or the parent-child reassessment exclusion under Prop 19, contact one of our California trusts and estates or real estate attorneys.

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Joseph Ferrucci is a hands-on trusts and estates attorney with more than a decade of experience.  He regularly assists his clients with estate planning related not only to ordinary wills and revocable living trusts, but also sophisticated estate planning strategies with respect to gift tax, estate tax and the generation-skipping transfer tax.  He has experience establishing and administering irrevocable gift trusts, irrevocable life insurance trusts, qualified personal residence trusts, and charitable trusts.  He also advises clients on real property matters and Prop 13 property tax planning. Read more here.