Homeowners in California will often be subject to high property taxes. However, the state’s laws do provide some benefits for property owners by limiting the amount that property taxes can be increased each year. When a home is bought or sold, a reassessment will be performed to determine the property taxes that will apply based on the home’s current market value. In certain cases, homeowners may be able to avoid a reassessment by transferring the value of their current home to a new property. A recent change in the law has affected when these “base year value transfers” may be performed.
Proposition 19 and Base Year Value Transfers
California’s Revenue and Taxation Code was amended in 2021 after the passage of Proposition 19. New provisions regarding base year value transfers went into effect on April 1, 2021. These included changes to who may perform these types of transfers and the time limits for doing so.
A property’s factored base year value is determined based on the value of the property in 1975 or the last time a reassessment was performed due to a change in ownership or new construction. This amount may be increased by a maximum of 2% per year, and property taxes will be assessed based on this value. A person who performs a base year value transfer will be able to transfer the factored base year value of their current primary residence to a new primary residence. If the full cash value of the replacement residence is higher than the full cash value of the original property, the difference in these values will be added to the transferred base year value.
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