Written by: Jason Kritzberg on December 16, 2020
What is Proposition 19?
Proposition 19, billed as “The Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” allows eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment. (Source: ballotpedia)
Proposition 19 also increased the number of times that people over 55 years old with severe disabilities can transfer their tax assessments from one to three. In addition, it requires that inherited homes that are not used as principle residences, such as second homes or rentals, must be reassessed at market value when transferred; and finally, allocates additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.
Why is Proposition 19 GREAT for Homeowners?
Proposition 19 (which passed, by the way) was favorable because it may result in tax savings for qualifying homeowners by allowing the assessed value of their principal residence to be transferred to a replacement residence in any California county. This might provide a significant benefit even if the replacement is higher in price then the previous residence.
By far, Proposition 19 was the most complicated measures on the 2020 ballot, so let us explain! The people who are benefiting the most from this prop are homeowners over the age of 55 who would pay lower taxes when moving to a new, more expensive residence. Essentially, homeowners will receive more benefits the longer they remain in their homes because their tax bills stay restricted even as their homes market value goes up.
Those who won’t benefit from Prop 19 are the children who inherit their parent’s home and intend to keep it as a second home or rent it out. Their property taxes will go up a lot. They would pay taxes on market value; however, if they move into the home they would be able to retain the tax break.
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