BACKGROUND
In November 2020, California voters passed Proposition 19, which makes changes to property tax benefits for families, seniors, severely disabled persons, and victims of natural disaster. These changes will become effective in February and April 2021, depending on the component of the measure.
“The implementation dates for Proposition 19 are fast approaching and my Office is working hard to inform the public about the changes that will occur. While there is still uncertainty about many components of the measure, this informational brochure will try and answer some of the basic elements of Proposition 19.”
Jeff Prang, Assessor
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The below content is from the LA County Assessors Office…
PARENT-CHILD & GRANDPARENT-GRANDCHILD EXCLUSION
| CURRENT LAW | PROPOSITION 19 | |
|---|---|---|
| Principal Residence | Principal residence of transferorNo value limitResidence and homesite (excess land may be excluded as “other property”) | Principal residence of transferor and transfereeValue limit of current taxable value plus $1,000,000 (as annually adjusted)Family homes and farms |
| Other Real Property | Transferor lifetime limit of $1,000,000 of factored base year value | Eliminates exclusion for other real property other than the principal residence |
| Grandparent-Grandchild Middle Generation Limit | Parent(s) of grandchild, who qualifies as child(ren) of grandparent, must be deceased on date of transfer | |
| Filing Period | File claim within 3 years or before transfer to third party | File for homeowners’ exemption within 1 year of transfer |
| Implementing Statute | Revenue & Taxation Code section 63.1 (implements Prop. 58/193) | To be determined |
| Important Dates | Through February 15, 2021 | Effective February 16, 2021 |
BASE YEAR VALUE TRANSFER-PERSONS AT LEAST AGE 55/DISABLED
| CURRENT LAW | PROPOSITION 19 | |
|---|---|---|
| Type of Property | Principal residence | |
| Timing | Purchase or newly construct residence within 2 years of sale | |
| Location of Replacement Home | Same countyCounty with intercounty ordinance (10 counties) | Anywhere in California |
| Value Limit | Equal or lesser value100% if replacement purchased/new construction prior to sale105% if replacement purchased/new construction in first year after sale110% if replacement purchased/new construction in second year after sale | Any valueAmount above 100% is added to transferred value |
| How many tranfsers? | One timeException: After using once for age, second time for subsequent disability | Three times |
| Implementing Statute | Revenue & Taxation Code section 69.5 (implements Propositions 60/90/110) | To be determined |
| Important Dates | Through March 31,2021 | Effective April 1, 2021 |
BASE YEAR VALUE TRANSFER-INTRACOUNTY DISASTER RELIEF
| CURRENT LAW | PROPOSITION 19 | |
|---|---|---|
| Type of Property | Any type of property | Principal residence |
| Timing | Purchase or newly construct property within 5 years of disaster | Purchase or newly construct residence within 2 years of sale |
| Location of Replacement Home | Within same county | Anywhere in California |
| Value Limit | Any valueAmount above 120% is added to transferred value | Any valueAmount above 100% is added to transferred value |
| Type of Disaster | Disaster for which the Governor proclaims a state of emergency | Wildfire, as defined, or natural disaster as declared by the Governor |
| Implementing Statute | Revenue & Taxation Code section 69 (implements Proposition 50) | To be determined |
| Important Dates | Through March 31, 2021 | Effective April 1, 2021 |
BASE YEAR VALUE TRANSFER – INTERCOUNTY DISASTER RELIEF
| CURRENT LAW | PROPOSITION 19 | |
|---|---|---|
| Type of Property | Principal residence | Principal residence |
| Timing | Purchase or newly construct principal residence within 3 years of disaster | Purchase or newly construct principal residence within 2 years of sale |
| Location of Replacement Home | County with intercounty ordinance (13 counties) | Anywhere in California |
| Value Limit | Equal or lesser value105% if purchased/new construction in first year after disaster110% if purchased/new construction in second year after disaster115% if purchased/new construction in third year after disaster | Any valueAmount above 100% is added to transferred value |
| Type of Disaster | Disaster for which the Governor proclaims a state of emergency | Wildfire, as defined, or natural disaster as declared by the Governor |
| Implementing Statute | Revenue & Taxation Code section 69.3 (implements Proposition 171) | To be determined |
| Important Dates | Through March 31, 2021 | Effective April 1, 2021 |
For more information on changes approved by Proposition 19 consult the State Board of Equalization’s website: boe.ca.gov/prop19/
WHAT IS PROPOSITION 19?
Inheriting Property
Proposition 19, or the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parent(s) ONLY if the property is the principal residence of the parent(s) and the child or children make it their principal residence within one year.
Transfer of Property Tax Base
The other component of Proposition 19 allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster, to transfer their lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times (or once per disaster). The tax base may be transferred to a property located anywhere in the state.
Proposition 19 changes two programs currently administered by county assessors:
1. Parent-Child Transfers (Prop. 58)/Grandparent-Grandchild Transfers (Prop. 193), effective February 16, 2021; and
2. Senior Citizen and Disaster Relief Tax Base Transfers (Prop. 60/90 /50/171 ), effective April 1, 2021.
For assistance, please call (213) 974-3441 or email [email protected]
Parent-Child Transfers & Grandparent-Grandchild Transfers
Current law, Prop. 58 & Prop. 193, allows a parent(s), and in certain cases grandparent(s), to transfer their existing property assessments of a principal residence of any value without triggering a reassessment, which is generally required upon a change in ownership – even if the property is used as rental property by the child.
Current law also allows for the inheritance of property assessments for up to $1 million in additional real estate, whether residential or commercial.
Under Proposition 19, in order to inherit the lower property assessment of the parent(s) or grandparent(s), the following conditions must be met:
1) The property must be the principal residence of the parent(s) or grandparent(s)
2) The property must become the principal residence of the child or grandchild within one year
3) Only the principal residence of a parent(s) or grandparent(s) qualifies for a base year value transfer. Other property, residential or commercial no longer qualify for this benefit
This provision applies to transfers starting Feb. 16, 2021 (since Feb. 15 is a holiday).
Senior Citizen Tax Base Transfers
Under current law, Propositions 60/90 and 110 allows persons over 55 or severely and permanently disabled persons to transfer the taxable value of their existing home to their new replacement home, so long as the market value of the new home is equal to or less than the existing home’s value and located in Los Angeles County or one of nine other participating counties in California. Proposition 19 allows eligible homeowners to transfer the taxable value of their existing home to their new replacement home of any value*, anywhere within the state, up to three times (rather than once as provided under current law).
* Subject to conditions.
The effective date of implementation is April 1, 2021.
Disaster Relief Tax Base Transfers
Under current law, Prop. 50 provides that the base year value of property that is substantially damaged or destroyed by a disaster, as declared by the Governor may be transferred to comparable property within the same county. Prop. 171 allows the transfer of the base year value of a principal residence to a county that has adopted the ordinance. Prop. 19 allows homeowners to purchase a replacement home of greater value than their original home and transfer their tax base with an adjustment to account for the value difference in cases of homes destroyed by wildfires or other natural disasters.
The effective date of implementation is April 1, 2021.
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