You have heard about it as the number one threat to your business.  But what exactly is a “split roll property tax” and how does it impact commercial real estate?

California’s system of property taxation under proposition 13 uses no “acquisition-value” standard.  County Assessors determine a property’s value when it goes through a change in ownership or undergoes anew construction, and tax is assessed a 1 percent of this value, plus a rate for voter approved indebtedness.  Thereafter the taxable or assessed, value of the property may increase annually by the lesser of the rate of inflation or 2 percent.

Currently, all properties are treated equally.  Under a split roll, not all properties on the assessment roll are treated equally.  For example, a split roll may require businesses to pay property taxes at a rate higher than the rate imposed on homeowners.  The immediate concern with this process, of course, is that commercial real estate will be viewed as “deep pockets” by local advocates seeking more revenue and will be a constant target for increased taxes.

Here is a Policy Brief on Split Roll.

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