How Will Proposition 19 Affect California Property Taxes?

 Posted on December 01, 2020 in Property Taxes

Tax laws in the United States change regularly at both the federal and state levels. In the 2020 election, California voters passed a ballot measure that made some changes to how property taxes are addressed when a person moves to a new home or transfers ownership of real estate property. Taxpayers will want to understand how this new law will affect them and what they can do to avoid tax increases.

Proposition 19 and Property Tax Reassessment

Under Proposition 13, which passed in 1978, property taxes in California are based on the purchase price of a property, and they are subject to small annual increases. When a property is sold or transferred to a new owner, property taxes are reassessed based on the market value of the property. However some homeowners have been allowed to transfer their property tax assessments to a new home. In addition, parents or grandparents could transfer a primary residence to their children or grandchildren without the need for reassessment, and they could transfer other types of property with the first $1 million in value being exempt from reassessment.

Proposition 19 has expanded some homeowners’ ability to transfer their tax assessment to a new home of an equal or lesser value. While this type of transfer was previously only allowed within the same county, a tax assessment will now be allowed to be transferred anywhere within the state of California. An assessment can also be transferred to a new home of a higher value while making adjustments to reflect this increase. Homeowners over the age of 55 were previously limited to one tax assessment transfer, but they will now be allowed to transfer a tax assessment up to three times.

Importantly, Proposition 19 will also place new limits on the exemptions from tax reassessment when transferring property to children or grandchildren. These exemptions will only be allowed in cases where children will use a home as their primary residence. If the market value of the property at the time of transfer is at least $1 million more than the property’s previous taxable value, the tax value will be reassessed based on the value of the property beyond the $1 million increase.

Contact Our San Jose Property Tax Lawyer

Proposition 19 will go into effect on February 15, 2021. Property owners may be able to take advantage of the exemptions available in the current laws by completing property transfers before that date. If you have questions about California property taxes, reassessments, or other related issues, contact our San Jose, CA tax law attorney at  408-866-1810.

Sources:

https://ballotpedia.org/California_Proposition_19,_Property_Tax_Transfers,_Exemptions,_and_Revenue_for_Wildfire_Agencies_and_Counties_Amendment_(2020)

https://www.sfgate.com/news/editorspicks/article/What-are-the-implications-of-Prop-19-15731809.php