The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfires or Natural Disasters Act – Proposition / Prop 19
MAINTAIN YOUR LOW PROPERTY TAXES WITH PROP 19 Even if you Sell Your current and Buy a NEW Home –
Proposition 19, (Prop 19) formerly known as Proposition 60 & 90 were designed to offset the effects of Proposition 13 which causes a reassessment at market value when the home is sold, and purchase a New Home and therefore results in additional taxes. No matter How LOW your taxes currently are!
The California State Board of Equalization (BOE) was created in 1879 by constitutional amendment and charged with the responsibility for ensuring that county property tax assessment practices were equal and uniform throughout the state. The BOE is responsible for property tax programs, alcoholic beverage tax, tax on insurers, and private railroad car tax.
The California Constitution, through the passage of Proposition 13 in 1978, limits the amount of property taxes to 1% of a property’s assessed value and caps assessment increases at 2% a year. Additionally, Proposition 13 allows property to be reassessed at market value when there is a change in ownership or upon completion of new construction.
On November 3, 2020, California voters approved Proposition 19, The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. This amendment to California Constitution Article XIII A provides for property tax savings for taxpayers in several exclusion and base year value transfer areas. Depending on the provision, there are two different operative dates, February 16, 2021 and April 1, 2021
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 became effective in February and April 2021.
“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
WHAT IS PROPOSITION 19 / PROP 19?
Inheriting Property
California Prop19, 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 oservices@assessor.lacounty.gov
Quick Comparison Chart of Former 60/90 versus New Prop 19 Provisions
| Former Rules – Proposition 58 / 60 / 90 / 193 | New Rules – Proposition 19 |
|---|---|
| Allows persons over 55 or with severe disabilities to transfer their tax assessments to a property of equal or lesser value either a) within a county (Proposition 60) or b) to another county if the county has authorized such a transfer by ordinance (Proposition 90). This was limited to 10 counties: 1. Alameda 5. San Bernardino 8. Santa Clara 2. Los Angeles 6. San Diego 9. Tuolumne 3. Orange 7. San Mateo 10. Ventura 4. Riverside |
Allows persons over 55, persons with severe disabilities, or victims of Governor-declared disasters can transfer their tax assessment anywhere within the state and allows the assessment to be transferred to a more expensive home with an upward adjustment. |
| Proposition / Prop 60/90 allows for only one transfer by persons over 55 years old or with severe disabilities. |
Increases the number of times that persons 55 years old or with severe disabilities can transfer their tax assessments to three and no limit for disaster victims. |
| No value limit on the transfer of the principal residence to child/grandchild |
Benefit is now limited to an additional $1,000,000 with an upward adjustment for amounts over the limit. Example: Let’s say the market value of the principal residence is $500,000 and the taxable value on the current tax bill is $300,000. Since the market value of $500,000 is less than $1,300,000 ($300,000 taxable value + $1,000,000), the taxable value remains the same at $300,000. Example: Let’s say the market value of your home is $1,800,000 and the taxable value on your tax bill is $500,000. Your new taxable value after the transfer would be: $1,800,000 market value – ($500,000 Taxable Value + $1,000,000) = $300,000 over $300,000 overage + taxable value of $500,000 = new taxable value is $800,000. |
| Can transfer up to $1,000,000 of other property in addition to the principal residence. |
Other property is no longer eligible for this benefit, only the principal residence or family farm can qualify. |
| No principal residence requirement for child/grandchild. |
Child/grandchild must occupy the property as their principal place of residence and qualify for either a homeowner’s exemption or disabled veterans’ exemption within one year of the transfer. |
Parent-Child Transfers & Grandparent-Grandchild Transfers
Prop. 58 & Prop. 193, allowed 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.
Prop. 58 & Prop. 193 also allowed 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
Propositions 60/90 and 110 allowed 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 / Prop 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
Prop. 50 provided 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.
Proposition 19’s provisions have become operative on February 16, 2021 (for intergenerational transfer exclusion) and April 1, 2021 (for base year value transfer). Unfortunately, Proposition 19 did not have companion legislation that would have clarified a host of issues. Therefore, these frequently asked questions (FAQs) are intended to help property taxpayers navigate those new provisions in light of Proposition 19’s lack of clarity or silence. It is anticipated that these FAQs will be updated periodically with additional questions, particularly if legislation is enacted or further guidance is issued by the Board. Please check back often for updates.
- What is the effective date of Proposition 19?Proposition 19, which was passed by the California voters on November 3, 2020, became effective on December 16, 2020, the 5th day after the Secretary of State certified the election. However, the changes to the parent-child and grandparent-grandchild exclusion will become operative and apply to transactions on February 16, 2021, and the base year value transfer provisions will become operative on April 1, 2021.
- Does the Board of Equalization have the authority to extend or change Proposition 19’s operative dates of February 16, 2021 or April 1, 2021?No. The Board of Equalization does not have the authority to extend or change Proposition 19’s operative dates of February 16, 2021 or April 1, 2021.
Base Year Value Transfers
- Under Proposition 19, will I qualify for the base year value transfer if I purchase my replacement home now and sell my original home on or after April 1, 2021?Proposition 19 requires the transfer of the base year value to occur on or after April 1, 2021. It does not require that both the primary residence be sold and the replacement primary residence be purchased on or after April 1, 2021. Therefore, in most cases, as long as either the primary residence is sold or the replacement primary residence is purchased on or after April 1, 2021, the base year value of the primary residence can be transferred to the replacement primary residence under Proposition 19. However, future legislation may impact the operation of Proposition 19 and any updates will be posted on the Board’s website.
- Under Proposition 19, will I qualify for the base year value transfer if I sell my original home now and purchase a replacement home on or after April 1, 2021?As answered in the prior question, as long as either the primary residence is sold or the replacement primary residence is purchased on or after April 1, 2021, the base year value of the primary residence can be transferred to the replacement primary residence under Proposition 19.For example, a person over age 55 years old who has already sold their original home and expect to purchase a replacement home on or after April 1, 2021 would qualify for Proposition 19 base year transfer.
- Is Proposition 19 retroactive and would it cause property transfers that have already received the benefit of Proposition 60/90 to be reassessed?The Proposition 19 operative date for the base year value transfer provisions is April 1, 2021. It is not expected that base year value transfers that have already been processed under Propositions 60/90 and Proposition 110 will be affected.
- If I use my one-time base year value transfer under Proposition 60/90, can I transfer that base year value three more times under Proposition 19?It is anticipated that three transfers under Proposition 19 will be allowed regardless of whether a property owner transferred a base year value in the past under Propositions 60/90 and Proposition 110. Future legislation may impact the operation of Proposition 19 and any updates will be posted on the Board’s website.
- Under Proposition 19, can I transfer my base year value to a home of any value?Yes; however, if the full cash value of the replacement home is greater than the full cash value of the original home, the difference in full cash values will be added to the transferred factored base year value.For example, an original home was sold and had a full cash value of $400,000 and a factored base year value of $100,000 at time of sale. If a replacement home is purchased for a full cash value of $600,000, the difference of $200,000 ($600,000 – $400,000) is added to the factored base year value of $100,000. Thus, the replacement home will have a new base year value of $300,000 ($100,000 + $200,000).
- Is Proposition 19 retroactive to disasters that occurred in 2020?Proposition 19 is effective on and after April 1, 2021, and also requires that a replacement primary residence is purchased or newly constructed as a person’s principal residence within two years of the sale of the original primary residence. Proposition 19 is not dependent on the date of disaster. However, future legislation may impact the operation of Proposition 19 and any updates will be posted on the Board’s website.
- To qualify for the base year value transfer, does the homeowner have to be (1) age 55 or over and (2) disabled and (3) a victim of a disaster (all three)?No, under Proposition 19, a homeowner may qualify for the base year value transfer under any one of the three categories listed; they do not need to meet all three categories in order to qualify.For more questions and answers on base year value transfers, please refer to Letter to Assessors No. 2021/019 – Proposition 19 Base Year Value Transfer Guidance Questions and Answers.
Parent-Child and Grandparent-Grandchild Transfers
- Is Proposition 19 retroactive and would it cause property transfers that have already received the benefit of Proposition 58 (Parent-Child Exclusion) to be reassessed?No, Proposition 19 is clear that Proposition 58 applies to transfers that occur on or before February 15, 2021, and that Proposition 19 applies to transfers that occur on or after February 16, 2021.
- If a family home is gifted to two children, do both children have to reside in the family home as their primary residence in order to receive the parent-child exclusion?We believe the intent of the Legislature was to allow the exclusion as long as the parent’s family home becomes the family home of at least one of the children.
- Under Proposition 19, if I inherit my parent’s family home and move into it and establish it as my principal residence, must I live continually in the home to receive the parent-child exclusion? What happens if I move somewhere else?We believe that at least one eligible transferee must continually live in the property as his or her family home for the property to maintain the exclusion. Thus if the property is no longer your family home, it will receive a new taxable value. The new taxable value will be the fair market value of the home on the date you inherited it, adjusted each year for the inflation factor, which is published by the BOE annually.
- Does Proposition 19 apply to a transfer of a rental home?No, Proposition 19 limits the parent-child exclusion to a transfer of a family home that is the principal residence of the transferor and becomes the principal residence of the transferee.
- Do we need to submit our application for the parent/child exclusion prior to the February 16, 2021 operative date to qualify for the exclusion under Proposition 58/193?As long as the date of transfer or change in ownership of real property between parent and child occurs on or before February 15, 2021, the transfer will qualify for the exclusion under Proposition 58/193. Therefore, as long as the claim is filed with the County Assessor within three years of the date of transfer or before a transfer to a third party or within six months of the date of notice of supplemental or escape assessment. Thus, the claim does not need to be filed by February 16, 2021.
- Will I lose the parent-child exclusion if the value of the family home is greater than $1 million dollars?The value limit under Proposition 19 is the sum of the factored base year value plus $1 million. If the market value exceeds this limit, partial relief is available. The amount exceeding the excluded amount will be added to the factored base year value.For example, a family home has a factored base year value (FBYV) of $300,000 and a fair market value of $1,500,000. The excluded amount under Proposition 19 is $300,000 + $1,000,000 = $1,300,000. The difference, $1,500,000 – $1,300,000 = $200,000. Thus, the adjusted base year value is $500,000 (FBYV $300,000 + difference of $200,000).
- If a parent died prior to the February 16, 2021 operative date and the Assessor does not become aware of the death until a year later and reassesses the property as of the date of death, are the parent-child exclusion provisions applied under Proposition 58 or Proposition 19?The date of death is the date of change in ownership. The law in effect as of the date of death will apply. Proposition 19 is clear that Proposition 58 applies to transfers that occur on or before February 15, 2021, and Proposition 19 applies to transfers that occur on or after February 16, 2021.
- I have my deed signed and notarized, and have submitted it for recording at my local County Recorder’s office prior to the February 15, 2021 deadline. What if my deed does not record by the February 15, 2021 deadline? Must my deed be recorded prior to that date in order to still be under the Proposition 58/193 provisions?No. As long as the date of transfer is on or before February 15, 2021, the transfer will qualify for the Proposition 58/193 exclusion. Property Tax Rule 462.260 makes clear that the recordation date of a deed is rebuttably presumed to be the transfer date. This means that if evidence is shown that the transfer occurred prior to the recordation date, the assessor should accept that earlier date. Such evidence could be, for example, the date of a notarized document of transfer, such as a deed.
- How is a property held in a trust affected by Proposition 19?The administration of a trust is governed by the trust instrument itself. For properties held in trusts, Revenue and Taxation Code section 61(h) provides that a change in ownership occurs when any interests in real property vest in persons other than the trustor or the trustor’s spouse or registered domestic partner when a revocable trust becomes irrevocable (also see Property Tax Rule 462.260). This typically occurs upon the death of the trustor. Thus, the date of death is considered to be the date of change in ownership. Proposition 19 is clear that Proposition 58 applies to transfers that occur on or before February 15, 2021, and Proposition 19 applies to transfers that occur on or after February 16, 2021.
- How do I apply for the homeowners’ exemption or disabled veterans’ exemption within one year of the transfer to qualify for the parent-child or grandparent-grandchild exclusion, as required by Proposition 19?To apply for the homeowners’ exemption or disabled veterans’ exemption, a claim must be filed with the County Assessor. BOE-266, Claim for Homeowners’ Property Tax Exemption, is the claim form to apply for the homeowners’ exemption, and BOE-261, Claim for Disabled Veterans’ Property Tax Exemption, is the claim form for the disabled veterans’ exemption. Both forms can be obtained from and submitted to the local County Assessor’s office where the property is located.
- I still have questions on Proposition 19. Who do I contact to discuss?If you have further questions, you may call the Board of Equalization’s Property Tax Department, County-Assessed Properties Division at 1-916-274-3350 or by e-mail.For more questions and answers on parent-child and grandparent-grandchild (intergenerational) transfers, please refer toLetter to Assessors No. 2021/008 – Proposition 19 Intergenerational Transfer Exclusion Guidance Questions and Answers.Below you will find additional resources on Proposition 19.
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To assist taxpayers, below are comparison charts reflecting the effects of Proposition 19.
PARENT-CHILD & GRANDPARENT-GRANDCHILD EXCLUSION
| Former Law | Proposition 19 (Current Law) | |
|---|---|---|
| Principal Residence | Principal residence of transferor No value limit Residence and homesite (excess land may be excluded as “other property”) |
Principal residence of transferor and transferee Value 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 | No change: 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 Propositions 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
| Former Law | Proposition 19 (Current Law) | |
|---|---|---|
| Type of Property | Principal residence | Principal residence |
| Timing | Purchase or newly construct residence within 2 years of sale |
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 value Amount above 100% is added to transferred value |
| How many transfers? | One time Exception: 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
| Former Law | Proposition 19 (Current Law) | |
|---|---|---|
| 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 Property | Within same county | Anywhere in California |
| Value Limit | Any value Amount 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
| Former Law | Proposition 19 (Current Law) | |
|---|---|---|
| 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 value Amount 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 |
Note: The information presented is intended to provide general and summary information about Proposition 19. It is not intended to be a legal interpretation or official guidance or relied upon for any purpose, but is instead a presentation of summary information. If there is a conflict between the information presented and the text of the proposition or its implementation, the text of the proposition or legal interpretation will prevail. It is highly encouraged that you consult an attorney for advice specific to your situation.
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Important Disclosures The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.
To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice
Proposition / PROP 19 RECAP –
Will Preserve Your Tax Basis
Moving to a new home doesn’t mean multiplying your tax basis. Proposition 19 lets you purchase a new house and keep your property taxes the same!
Applies to Any California Home
Proposition 19 applies to the purchase of any property in the state of California, regardless of price. Don’t let taxes stop you from getting the home you want.
Can be used Up to Three Times
First house wasn’t quite right? You can take advantage of Proposition 19 on up to three different properties!
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Note: The information presented is intended to provide general and summary information about Proposition 19. It is not intended to be a legal interpretation or official guidance or relied upon for any purpose, but is instead a presentation of summary information. If there is a conflict between the information presented and the text of the proposition or its implementation, the text of the proposition or legal interpretation will prevail. It is highly encouraged that you consult an attorney for advice specific to your situation.
Visit also our 55+ community page
https://homesinsdcounty.com/over-55-san-diego-county/
The information contained herein is intended to provide general information and is not intended as substitute for individual legal advice. Specific examples used are only general examples, and the actual amount of property taxes owed for any person will depend on the specific situation of the
individual and a wide variety of other factors. Therefore, all persons are directed to seek the advice of an attorney regarding their specific tax and legal situation
Please speak to a professional mortgage broker to get more accurate info based upon your personal finances….
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