{"id":38909,"date":"2020-10-13T15:45:18","date_gmt":"2020-10-13T12:45:18","guid":{"rendered":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/?p=38909"},"modified":"2025-05-22T13:10:30","modified_gmt":"2025-05-22T10:10:30","slug":"california-prop-15-commercial-and-industrial-tax-increase","status":"publish","type":"post","link":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2020\/10\/13\/california-prop-15-commercial-and-industrial-tax-increase\/","title":{"rendered":"Proposed Tax Law Amendment in California Could Greatly Affect Commercial & Industrial Properties"},"content":{"rendered":"\n

NYC-based boutique law firm\u00a0<\/em><\/strong>Pardalis & Nohavicka<\/em><\/strong><\/a>\u00a0brings the latest legal updates from the world of real estate. Pardalis & Nohavicka handles an eclectic array of matters, representing individuals and business owners in civil litigation, criminal cases and business transactions, currently litigating and representing clients throughout the United States and around the world.<\/em><\/strong><\/p>\n\n\n\n

Since 1978, California has used the Proposition 13 tax system. Under the current property tax system, all property types, \u2014 whether residential, commercial or industrial \u2014 are initially taxed at a maximum rate of 1% of the purchase price for the property. Then, annual increases are equal to the rate of inflation, with a maximum of 2% per year \u2014 very minimal increases. <\/em><\/p>\n\n\n\n

However, Proposition 15, an updated amendment, is now up for a vote and could eradicate Proposition 13.<\/p>\n\n\n\n

<\/span>What Is Proposition 15?<\/span><\/h3>\n\n\n\n

Proposition 15 is an amendment to the California state constitution. Specifically, it seeks to require commercial and industrial properties to be taxed based on their current market value, as opposed to their original purchase price. If passed, this bill would drastically increase property taxes for many properties throughout California. That\u2019s because the current market value of most properties is much higher today than their original purchase price.<\/p>\n\n\n\n

Notably, many landlords initially purchased property years ago \u2014 at a time when the market value was far lower than its current value \u2014 and even before considering inflation. <\/p>\n\n\n\n

For example, landowner \u201cX\u201d purchased a commercial building in 1991. At that time, the purchase price was $350,000 and, therefore, the property taxes for landowner X\u2019s building is based on this price. But, in 2020, that same commercial building is now worth $3.5 million. Per Proposition 15, this would now be the amount that the property tax would be based upon.<\/p>\n\n\n\n

However, there are a few exceptions to Proposition 15:<\/p>\n\n\n\n