Time to Move Up?

Passage of Prop 19 + Historically Low Rates

Proposition 19 took effect on January 1, 2021. The rules for tax assessment transfers have changed. Previously, in California, eligible homeowners could only transfer their tax assessments to a different home of the same or lesser market value to move without paying higher taxes. Homeowners who were eligible for tax assessment transfers were persons over 55 years old, persons with severe disabilities, and victims of natural disasters and hazardous waste contamination. Only one move was allowed, and the locations were restricted.

Now, the ballot measure allows eligible homeowners to transfer their tax assessments anywhere within the state and allows tax assessments to be transferred to a more expensive home with an upward adjustment. The number of times that a tax assessment can be transferred increased from one to three for persons over 55 years old or with severe disabilities (disaster and contamination victims would continue to be allowed one transfer).

How did the ballot measure affect inherited properties?

In California, parents or grandparents previously could transfer primary residential properties to their children or grandchildren without the property’s tax assessment resetting to market value. Other types of properties, such as vacation homes and business properties, could also be transferred from parent to child or grandparent to grandchild with the first $1 million exempt from re-assessment when transferred.

Prop 19 eliminated the parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence. When the inherited property is used as the recipient’s principal residence but is sold for $1 million more than the property’s taxable value, an upward adjustment in assessed value would occur. The ballot measure also applied these rules to certain farms. 

In Short, Prop 19

  • 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.
  • Increases the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three.
  • Requires that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred.
  • Allocates additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.

Read all the Prop 19 Rules Here

The Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act

Give me a call if you would like to discuss the ramifications of this proposition. Maybe this is an opportunity for you!

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This post was written by Rumana Jabeen

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