Proposition 19, which was one of two Propositions on the California ballot that affected state property tax rules, has passed and been approved.
The passing vote means the following:
- Eligible homeowners can transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment;
- There has been an increase in the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three;
- It requires that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred; and
- Allocates additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.
The new rules will take effect on transfers that take place after February 15, 2021. Real estate owners with low-assessed values of legacy properties may want to consider ways to preserve their ability for intra-family transfers prior to Prop 19 taking effect early next year. This is to decrease the potential cost to future generations of keeping real estate within the family.
New property tax exemptions under Prop 19 include revising the Parent-to-Child exemptions. This includes limiting the types of transfers between parents and children that can be exempted from reassessment and changing the property tax benefit available.
Only a transfer of the parent’s principal residence to the child (where they continue to reside principally) would qualify. And should the transfer meet these requirements, the child’s assessed value would be determined based on the assessed value at the timing of the transfer.
Here’s a closer look, keeping in mind this is at the time of transfer:
- If Property Value Exceeds Parent’s Assessed Value by Less Than $1 Million: the child takes the parents’ assessed value.
- If Property Value Exceeds Parent’s Assessed Value by More Than $1 Million: the child’s assessed value becomes the current property value less $1 Million.
If we can be of service to you or have a question about escrow or our services, please get in touch. We’re here to help!
