San Diego voters may decide this June whether to impose an annual tax on owners of vacant second homes. The City Council voted 8-1 to place the measure on the ballot, potentially levying taxes of up to $12,000 on these properties.
Details of the Proposed Tax
The measure, introduced by Council member Sean Elo-Rivera, would target approximately 5,100 homes vacant for more than 182 days per year. If approved by voters, the annual tax would begin in 2027 at $8,000, increasing to $10,000 in subsequent years. Corporate-owned vacant properties would face additional surcharges, starting at $4,000 in 2027 and rising to $5,000.
However, the proposal includes exemptions for primary residences, rental properties and owners of small residential properties – those with four units or fewer where the owner occupies one unit. Exemptions are also outlined for documented hardship, military service, disaster damage, probate proceedings, and long-term care situations.
Legal Challenges Anticipated
The California Apartment Association (CAA) formally opposes the measure. In a February 27 letter to the City Council, the CAA warned that the San Diego proposal mirrors a similar tax in San Francisco that was recently challenged in court. A trial court ruled that the San Francisco tax constituted an unconstitutional taking and conflicted with the Ellis Act, a state law protecting property owners’ rights.
Council member Raul Campillo was the sole dissenting vote, expressing concerns about the city’s ability to successfully defend the measure against potential litigation – echoing the CAA’s arguments.
Potential Impact and Revenue
Proponents of the tax believe it will increase housing availability in a tight market. The city’s Independent Budget Analyst projects the tax could generate between $9.2 million and $21.4 million in its first year, depending on the number of exemptions claimed. The CAA cautioned that the tax could discourage property rehabilitation and redevelopment.
Frequently Asked Questions
What types of properties would be subject to this tax?
The measure targets approximately 5,100 homes left vacant for more than 182 days a year.
What are the potential tax amounts?
Owners would pay $8,000 annually beginning in 2027, rising to $10,000 in subsequent years. Corporate-owned properties would face additional surcharges.
What are the exemptions to this tax?
Primary residences, rental properties, small residential properties, documented hardship, military service, disaster damage, probate, and long-term care situations are all exempt.
Will this measure ultimately succeed in increasing housing availability and generating revenue for the city remains to be seen, dependent on voter approval and potential legal challenges.
