Prop 19 is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property and replaced previous Propositions 58/193 as well as Props 60 and 90.
*Information is directly from the LA County Assessors website. Information deemed reliable but not guaranteed. See comparison chart showing former propositions (old law) with prop 19 (new law)
Prop 19 Background
In November 2020, California voters passed Proposition 19, which made changes to property tax benefits for families, seniors, severely disabled persons, and victims of natural disasters. These changes became effective in February and April 2021, depending on the component of the measure.
What is Proposition 19?
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:
- Parent-Child Transfers (Prop. 58)/Grandparent-Grandchild Transfers (Prop. 193), effective February 16, 2021
- Senior Citizen and Disaster Relief Tax Base Transfers (Prop. 60/90 50/171), effective April 1, 2021.
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 the new Proposition 19 (effective Feb. 16, 2021), parent(s) and grandparents(s) can transfer their property along with its Proposition 13 base year value to their children or grandchildren if the following conditions are met:
- The property must be the principal residence of the parent(s) or grandparent(s)
- The property must become the principal residence of the child or grandchild within one year, and all applicants must have a valid Homeowners’ Exemption (HOX) filed within 1 year of the transfer in order to qualify for this exclusion.
- 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
The provisions under Proposition 19 apply to intergenerational transfer exclusions starting Feb. 16, 2021 (since Feb. 15 is a holiday).
Transfer of Assessment to a Replacement Property (55 and Older and Disabled)
Propositions 60/90 allowed persons over 55 or severely and permanently disabled persons to transfer the taxable value of their existing home to a new replacement home, so long as the market value of the new home is equal to or less than the existing home’s market value and located in Los Angeles County or one of nine other participating counties in California. Proposition 19 (effective April 1, 2021) modified the previous provisions, and now allows eligible homeowners to transfer the taxable value of their existing primary residence to a new replacement primary residence. The replacement residence can be of any value*, and anywhere within the state. The exclusion can be filed up to three times by a property owner over their lifetime.
*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