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What does the Prop. 13 split mean for commercial property owners?

On Behalf of | Dec 15, 2019 | Firm News

California ranks among the highest in the nation for property taxes. The burden of these taxes is felt largely by commercial property owners in the state. To make their investments worthwhile and bring in the maximum revenue, the owners of commercial properties may pass some or all of this burden onto their tenants. According to a California Globe report, commercial property owners in the state may see their property taxes increased if a recently qualified ballot initiative is passed. 

The proposed initiative seeks to split Proposition 13, applying different tax rates for commercial properties and residential properties. Currently, the tax rate for commercial and industrial properties is capped at 2%. However, under Proposition 13 split roll initiative, commercial properties would no longer have the proposition’s protections and could be taxed at a much higher rate. 

Those opposed to the Proposition 13 initiative suggest it is a targeted tax increase on businesses. Further, they point to the significant increase in local property tax assessments since the implementation of Proposition 13, which amount to $19 billion between 2008-2009 and 2018-2019, as evidence that the proposition is not starving the local government of revenue to which it is due. 

Advocates for the proposed initiative, however, suggest that the proposition as it is currently written allows businesses to pay less than their fair share of property taxes. The initiative’s supporters tout it as a means to bring much-needed and previously missed-out-on funding to public education in the state. 

The information contained in the preceding post is meant for general purposes only and should not be considered as legal advice.